Hi
Is it necessary to take profit?..we going to miss more profit if we limit the profit…rite?
This is maybe the most interesting and most difficult of questions in trading. People might say the answer depends on the style of trading - I say your style of trading depends on the answer to this question.
I don’t set a take profit order when I open a trade - I want price to have the possibility to run on further than I thought it would. Realistically, I cannot with 100% certainty predict where price will stop on each trade so if I did place a TP order, it would be wrong, except by lucky coincidence. So I let each trade run until it reaches a price from which it is more likely to reverse than continue. you can use a trendline for this or a MA or a Fib level or a round number price or prior support or resistance, it does not really matter. What’s important is that each trade has freedom to reach its own level however high it might be, rather than how high I think it should be.
I don’t like trailing stops as they are not based on TA. I am wary of the orthodox stuff about not letting your profit go back into the market - this can lead to random non-TA-based exits when you either get scared or try to second-guess the market - the right exit is where TA says to exit.
Thanks for reply…since you not set profit…are you always check on the chart??
I am a long-term trader so this is easy. I check prices periodically each day but only close a winning trade if the London closing price is weak and it seems more likely to go against my direction. I don’t act on intra-day volatility.
I got to disagree with you somewhat tommor. I do agree with him that leaving your profits to run is a great strategy and run I try to use a often as I can. However as he said he likes to manually exit when price reaches a point where price is more likely to reverse on the position than continue. Well my friend that is a take profit. For me I dont like to worry about my trades so at a point were price is more likely to reverse than continue in my direction I like to set a take profit just a little before this area. That way If price gets to this area and I am sleeping or playing with the kids or out drinking with the boys it will cash me out at a profit and I dont have to see when I wake up that price hit my desired price levels then reversed and now price has moved a great deal against me regardless if I am still in profit or not.
Now with that said if I check the charts and price seems to have significant momentum and looks like it will go past this area I was eyeing as my profit target it I am not against moving it to a higher level and trailing up my stop so if price does keep going in my direction great but if it didnt and reverses price is limited on just how far and how much profit it is going to take back because I was getting some beauty sleep (if you ever see me in person you will know I need a lot of beauty sleep lmao).
Also saying training a stop is not based on TA is just purely wrong. I can agree setting an automatic trailing stop of say 30 pips that I see people do to me just dont make sense and is just insane in my opinion. But manually trailing a stop based on TA is entirely possible. Say price is in a up trend I go long price goes up. Awesome I am in profit but now price decides to retrace before getting to my profit target but then pushes back higher making a significant new higher low then it is perfectly sensible to move your stop up to that higher low. This way again if while I am getting my beauty rest and the uptrend decides to crumble and go lower it cashes me out in profit or more profit than waking up and seeing the trend has come to an end and well I am now either taking a loss or cashing out a lot lower then if I would have just moved the stop up.
So I am all for letting winners run but I am also for making sure you lock in those profits while you have them. Why let a winner run if you are not going to lock in that runner and keep it. Some can say sleep less, not go out with the boys or play with the kids as this is a business and needs to be taken serious and to a point I agree. I also strongly believe that I work to live not live to work. So while this is a very serious business I also understand my time is just a valuable or why do it at all?
I keep a wide Take Profit level set for the same reason I keep a Stop set, sudden and unexpected spikes. They occur about as often in my direction as against me. When they occur in my direction, I make a big quick profit. It works for me, but each trader is a little different.
How can you say that you are going to miss profit, price can reverse on you more times than missing more profit. So its good to set a take profit and be consistent on it.
Many thanks bob, a thoughtful argued post.
But as a trend-follower, an intra-day spike just doesn’t matter. Even if it reverses and hits my stop. Eventually, I do take profits on running winners, but only based on the TA at the close after the position has already passed b/e. Intra-day spikes I just ignore by not ever setting a take profit order.
Hi forexcisp.
Depends on the set-up. If you’re a trend-follower like me, you will only be going long in an uptrend. Price in an uptrend, regardless of its numerical value or days since commencement at any individual point, is more likely to continue or range temporarily before resuming upwards than to reverse. So price in an uptrend does not reverse on you more times than missing more profit.
So if you’re not buying in an uptrend, you might right. But I believe that is the wrong starting point anyway, condemning your trades to random outcomes.