As the title suggests when should you take profit ?
I have been trying to go by the rule ‘let your winners run cut your losers short’. As I see a move of about 30-40pips to my direction I move my SL 10-20 pips past my entry point locking in average 10-20 pips.
Now the problem that I have been encountering is I trade dailies and usually my TP is placed at the next major support which happens to be a bit further away from my entry point.
On couple of occassions where I tried to go by the rule ‘let your winners run cut your losers short’ while I’ve managed to lock in some profit I’ve lost the half. For example I saw a move of 40 pips to my direction I moved my SL past my entry and waited to pocket in more pips /according to my system I should be/. However in between there always comes a time where the price starts heading the other direction and hit my moved SL. So in the end I lose half of my projected profit and only take half.
When I zoom in onto 4H charts, the move to the opposite direction either bounces off of support or resistance and after a while decides which direction it wants to go no matter what the Daily TF indicates as major support and resistance.
I thought if I keep allowing this to happen lets say my win to loss ratio is 50/50 then pretty much I end up break even month after month. I haven’t done any in depth calculation to support this. But logically I think it makes sense isn’t it ? :33:
So here’s my question again when should you take profit ?
I have heard plenty of traders say take it when market gives you green pips.
I have been thinking maybe thats what I should do as well, I mean market is unpredictable. There’s so much uncertainty though we’d like to make it predictible and certain. There still remains uncertainty. It is what it is.
So what do you guys think ?
Let your profits run B[/B] take those green pips when market makes it available :33:
Here’s how I do it - When the price reaches your profit target take a look - are there any strong reversal signals? Are your indicators telling you that the move has run out of steam? If the answer is ‘no’ - close only part of your position, lets say - 3/4 of it. This way you make sure that you’ve still have grabed large part of your maximum profit intended for a particular trade, but you can still let your profit run for the rest 1/4 of your position. If the price continues to go your way just keep trailing your stop.
No easy answer. I accept that I will always leave pips on the table. Gains are only realized when the trade is closed. As long as your wins are exceeding your losses, don’t think much about it.
I don’t trade with stop losses or profit targets. I look each day and see what the market is doing and do my best to roll with the punches.
“No easy answer” is right. How ever you determine stop loss, take profits, measure risk, project profits, whether you mark them or not, (Personally I think you should), when your analysis is correct and you make a lot of money; you’ll feel like a genious,; when it doesn’t work out, you’ll feel dumb.
I mark mine based on what I determine is major support and resistance.
As mentioned above, there is no easy answer. It really all depends on the trader, strategy, time horizon and analysis. Different strategies will have different entry/exit approaches and management of open trades.
This is exactly the reason I just always take full profit @ 30 PIPS now, I don’t think about it, I don’t care what happens after, I don’t concern myself with what if’s and maybe’s.
Loose 25 PIPS or gain 30 PIPS, and not much else comes into the equation, it might not be the best MM but it works for me, well at the moment it’s looking very promising. But the main thing is that it doesn’t give you a psychological issue, I accept it’s either win or loose a fixed amount and that’s it.
what you are doing right now, are you coming up net profit or net loss?
If you are coming up net profit consistently despite all these non-optimal losses, DON’T CHANGE anything. You have a winning strategy, and you need to let it run. Since the market is so unpredictable, you will screw yourself if you try to aim for a perfect exit every single time, because every trade you do will be slightly different.
Now if you are coming up net loss and are trying to improve your system so it becomes net profit
come up with a rule for the system
apply that rule over multiple trades
monitor the results to see if you have an improvement or you screwed the buck more.
You could use trailing stop losses so you don’t have to worry about where you take your profit. The trailing stop losses can be dynamic or fixed, depending on how volatile the market is. With more volatility, if the step in the trailing stop loss is higher then you will reduce the risk of the market swinging in the opposite direction to your position, taking out your stop loss and then continuing back in the same direction as your now cancelled position. However, if the step in the trailing stop loss is higher you may also risk larger losses in individual trades (but may be more consistently profitable overall). Trailing stop losses would be good for trends but perhaps not so good for ranges.
Also you want to monitor the trades with price action and indicators to see if their is any sign that the market may move against you. If there is a sign (or better yet several), have a tighter trailing stop loss. Risk management is always good. While take profit levels may not be needed with trailing stop losses, it is good to have an idea of support and resistance so you can get an idea of your potential profit and loss and from that the risk:reward ratio which should always be greater than 1, better still if its 2 or more.
I guess when you enter your trade you know how much profit you are looking for, so when you reach your profit just enter a stop loss order at that level and don’t worry about it. And you should not think about what if.
@mastergunner99 I agree with you 100% that you will always leave some pips on the table I guess it’s about time that I should come to terms with that.
@merry trader it’s a good idea to take profit at 20-40 pips range. Currently two pairs that I trade usually move between 20-40 range during sydney and tokyo session /session that I prefer to trade/. So if i’m right usually 20-40 pips come in without much effort in a matter of few hours. And I always try to close my trades before NY open. Usually during that session I noticed if i’m still in the trade takes an opposite direction for a while though not completely while washing away half of my unrealized profit and only then I bail out. So i guess it comes down to pairs and sessions you trade. I think I’ve almost reached a conclusion by now as to if i should go by let your profits run or take it while you can. I’ll go with the latter I’ll take what I can with these pairs. 20-40pips in few hours isnt too bad I guess I shouldn’t be that greedy. I really appreciate your post thanks!
@jwlee7ucla I haven’t achieved a consistency yet I’ve only been trying to refine my system. And in doing so I just realized when you mentioned that is it was crucial that I create a rule for my system. Without the rule it is highly unlikely that I will achieve consistency. Thanks a lot! I’ve made a list of ‘code of conduct’ for my system haha :D. Hopefully it works out :51:\
@jamesr I’ve tried incorporating trailing stops and together with regular fixed stop loss as well. I wasn’t comfortable with how it was playing out on my live trades. I was uneasy that I had them. Each to his own. I think i’ll do better without it. I’ll take the fixed stoploss and mental take profit :33:
When you do get stopped out, does the trade go in your favour? ie. is your stop too tight?
As stated, you’re always best to leave some pips on the table as if you could perfectly pick the tops & bottoms, you wouldn’t be on here - instead you’d be in your Ferrari, doing laps of your private racetrack that’s on your yacht. If you catch a trade at the top or bottom, assuming that you get the direction right (buying troughs & selling peaks) then great but you never know when that moves is going to end so if you think it’s going to end at the next support/resistance leave some pips on the table incase price doesn’t quite get there. If you have your doubts, lock in your profits & walk away - don’t let the psychology eat at you. The what-ifs will ruin your trading, yeah if you tightened your SL you would have made 30 more pips but in the next instance, that same move could see you miss out on another 80 pips.
Keep learning, keep evolving & all these experiments & tweaks will hopefully have you coming out as a profitable trader in the long run.
Hi,
Is it better to take 20 points profit at £2 per point than to try to get 40 points at £1 per point ?? - the result is the same monetary value. I remember when I first started trading, attending a seminar and the speaker said that he only looked for 3 points per day… He traded £1000 per point ! Surely that’s a great profit per day and very easy to get 3 points ??? Just build it up slowly and consistently… Then join the big boys.
To make the same profit for a small amount of points, larger volumes need to be traded. For example, high-frequency or flash trading makes profits over tiny pip increments as you describe, however to do so huge trading volumes are made at razor-tight spreads. Many people do not have access to large volumes of money that they can afford to lose. Additionally, trading at larger leverages also increases risk and may not be a good idea for inexperienced traders, or even experienced ones. For inexperienced traders, trading at razor-tight spreads through an ECN or dealing-desk model may not be a good idea, especially for the dealing-desk, as orders can be manipulated.
I think that its depend on your self target in trading…
But i suggest to take small profit and imitate those rapidly.
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How much money do you need in an account to trade £1000 a pip. Depending on the leverage, i know, retail traders would rarely be able to trade such size. im guessing thats about 10 lots, which you could do with 20k in an account if you were incredibly inclined towards taking great and substantial risk. actually it would be 100 lots per trade, its a nice idea to get less pips but the pips to be worth more because of the sheer size of the trade, that is the dream we all want i guess.
“Letting your winners run” is just one of those fluffy trading maxims that you hear over the internet. It sits alongside other fluff like “only risk 2% per trade” or “always use a 1:2 risk:reward ratio”, lol.
As others have mentioned, placing your TP before support / resistance is probably the best place. You can try quantifying the optimal TP through a backtest, and then use a bit of discretion when setting your TP in a live trade. For example, if your backtest shows that a 20 pip TP is optimal and your live chart shows that there’s a support level 17 pips away, you can set your TP to 17 pips instead of 20 pips. Or if support is 25 pips away, you can extend your TP to 25 pips. You have some idea of your optimal TP due to backtesting, then use a bit of commonsense when you trade live to further maximise your chances of finishing in profit.
Was that JY by any chance?
He’s been dealing that hand for years on one of his regular event plays. It’s not an uncommon tactic amongst professional traders, especially in times of dissipating & contracting volatility.
I was at the ifx expo in Limassol in May & sat in on a small gathering which included 2 former students of his, who both freely shared their respective hard copy broker statements to interested parties validating min 3yr track records via that tactic.
The maximum bets were in the £300-500pp region banking 5 pip/point exits on specific but repetitive set ups.
Hi,
What I meant to say was that if you have a small account, obviously you trade small and keep tight money management. As your account grows, more money per point can be used, allowing capital to grow with compounding. If your trading strategy works with £1 per point - it will work with £100 per point and ultimately £1000 per point. If the instrument you are trading averages a 20 move during a day then it is easier to take 10 points than to stress out about trying to get 20 points, however if you are confident in your system, then more money per point will equal the same profit. However of course this means a higher risk of loss and this has to be incorporated in the risk management of your given trade.
