Exit Strategy (Locking in profit)

Beginner Questions
#1

I’m a FX newbie. Been studying forex and trading for around 2 years, read countless books, articles, posts and watched endless videos.

I’ve now got a price action/swing trading strategy I am comfortable with, and so far, has had more winners than losers (about 4 months).

Now I am happy with the system, I need to increase my knowledge on managing the trade and locking in profits

As you can see from this picture, I am currently in a nice NZDCAD trade and it is heading towards my TP level.

NZDCAD.jpg700×297 27.2 KB

The TP level will be a new low, and will have to break through a strong support level to reach this. What I would like to do is lock in a large proportion of my profit, to avoid the trade bouncing from the support and hitting either BE or my Stop loss.

I know there are a number of methods, ie closing part of the trade, or moving the stop loss to a profitable level.

My question to you is, what do you feel is the most effective exit strategy to look in profits?

And with that strategy, what is your step by step method? When do you start looking to lock in profit? And how much do you lock in?

Really appreciate your help in advance.

Regards,
Jack

#2

I take profit at three to one risk reward. So if I have a 30 tick stop and 100 tick profit target, I’ll close at 90 if I need to. Build the habit of closing trades.

#3

You appreciate that “having more winners than losers” doesn’t [U]in itself[/U] give a strategy an edge?

Personally, I trade 5 lots/contracts, at the moment, closing the first two together and then the third some ticks/pips further on, automatically, at levels pre-defined on entry, in proportion to the volatility and taking recent support and resistance levels into account.

To the extent that someone else’s exit strategy might be relevant to your trading, given that they’re trading a different system from yours, I’d suggest that the “in proportion to the volatility” and “taking recent support and resistance levels into account” components of the equation might be the most relevant ones?

Honestly, it’s not relevant to you, Jack, without explaining in detail all the other aspects of the trading method, to which of course it [I]is[/I] relevant.

As quickly as I can, [I]without reducing the overall proven edge of the method[/I].

And that [I]should[/I] be everyone’s answer, really? Or every profitable trader’s answer, anyway. But that inevitably takes a great deal of research and testing to determine, for any given trading system.

Sorry if my answer’s unhelpful, but you appear to be asking direct, detailed questions about the step-by-step operation of other people’s exit parameters, without there being any underlying reason at all why they’d be either relevant or appropriate to what you’re doing, yourself? I’m struggling, a bit, to see how this is going to be a beneficial approach to you. :33:

#4

What I or anyone else will tell you is irrelevant, because like any other entry or exit strategy, you should create it for yourself. What I or someone else is using as a exit strategy, probably wont work for you.

#5

Hi JackSykes,

I notice you are using fibonacci retracement level tool.
I think you can use the 38.2 and 61.8 retracement level as targets projection level during a bounce,
and 50% for breakout targets projection.


#6

As everyone has said, it varies from person to person & strategy to strategy.

My personal inclination looking at it: you’ve used Fibs to get your entry & you’re expecting the trend to continue. I would be closing half the position once price reaches the low again & having, say a 161.8% projection TP or another technically placed TP.

Dependent on how good your entry is & how many multiples of R your trade progresses by, I agree with Lexy: try locking in profits as soon as possible without hindering the lifespan of your trade. Try a 2R trailing stop or experiment with various options. It’s all about experimentation until you find what works for you, not anyone else, but what YOU are comfortable with.