I saw your post while reading some other stuff and thought I’d add a few thoughts.
I (and others, of course) have often spoken about exit strategy as one the most critically important components of any trading strategy. And yet it is one of the hardest to optimise. And there is a good reason for that: Every trend is unique in its duration, strength and extent - and they can be very different from each other whatever TF one uses.
I think there are three broad approaches to exiting:
- a fixed distance in pips
- capturing extreme high/lows in moves (e.g. bollinger bands, envelopes, FIb extensions, etc)
- a measure of exhaustion and reversal (e.g. trailing stops, fib retracements)
None of these individually will work all the time but a combination of 2 or 3 such categories can work well.
For example, with multiple positions, opened either simultaneously or via scaling, exiting could be handled with a combination of:
a partial amount with a fixed pip target set at a distance typically achieved on a particular TF following an entry signal (e.g. 30-50 pips). This helps cover the exposure on the remaining open positions.
and a further portion can target a spike or OB/OS where price reaches an extreme level determined by, say, bollinger bands, envelopes, RSI OB/OS, etc.
this then leaves the balance with no set target and is eventually exited on a trailing stop (either automated or manual).
A further alternative is to use multiple TFs to identify a reversal. If one is trading off a daily chart, then monitoring a set-up on a 4-hour or 1-hour chart can pinpoint trend weakness before it appears on the daily chart - and, in the same way, is also useful for providing new signals for re-entry.
I think the choice of exit techniques depends very much on the TF being used for trade entries. Trend trading on the daily (or longer) TFs usually means looking for longer, bigger moves and therefore offers more opportunities for varied combinations of exit approaches. But trading off, say, 1-hour charts and daytrading, in general offers a much narrower choice of exit strategies (e.g. trailing stops will usually give back most or all of any profit gained).
Just as an example, in my own case, I am a daytrader, I use only two techniques, 1) one fixed pip value for my target and another, related, pip value for stoploss, and 2) an envelope to catch extremes in moves. But neither of these are written in stone, rather they offer an initial setting which is then tweaked to account for possible S/R areas, recent high/lows, candles, etc.
I use exactly the same set-up on daily, 4-H and 1-H charts. The daily gives me the overall picture, the 4-H then tells me where we currently are in this overall picture (e.g. initial momentum, consolidation, exhaustion,- etc) these two tell me if I am generally looking to buy or sell. Then the 1-H chart gives me my entry signals.
Incidently, these same envelopes can also help avoid entering trades at extreme points as well as indicating exit areas!
But these are just my thoughts on the topic. It is a very important issue for every trader. It is highly possible to achieve a high rate of entry success but still lose money. The entire issue of how much one makes from a winning trade is determined far more by where we get out than where we get in…