hi, all,
i have been trying to find way to get out of a trade at maximum profit but always incorrect, greatly appreciated if someone can tell me how? many…many…thanks in adv.
There’s a book about candlestick, written by Steve Nison.
That is a good start to know about candlechart.
Maximum profit is hard to define. The price zig zags and there is no perfect way to predict when it turns around and for how long.
Here are a few ideas for your exit:
- place a take profit around the next major support/resistance.
- trail your stop loss each time a support/resistance level has been passed. Then it will be hit when the trend changes
- trail your stop loss with a fixed value, for example 20pips. Or a value based on the ATR, for example twice the ATR.
- have a fixed take profit, for example 20 pips. many scalping system would use a rule like that.
- have a take profit take profit based on the long ATR of an higher timeframe. For example you are making your entries on M15, you expect your trade to hold for less than a day. You could use the ATR of the H4 timeframe as a target.
- close the trade from an indicator input. For example of the price crosses a moving average, or if a stochastic turns oversold, etc…
- after a period of time have passed. For example you can close your trades on the friday evening. no matter what.
- if fundamentals change.
I am probably forgetting some. If your system aims to catch long term moves, you could trail your stop and not use take profit. Therefore you would let the price go in one direction as long as possible.
If to the contrary you have a clear target which is not far ahead in time you could use a take profit.
I think candlestick trading is awesome in the short-term, and as a result of this, one needs to consider it for intra-day trading and exit once there is a bullish candle against one’s short trade; and vice versa.
Aren’t we all?
The truth is: probability rulez over all things trading.
Since no-one can predict what all the traders in the world will be doing at any point in time, there will always be uncertainty.
The key is: not to beat yourself at your own game. Decide for yourself what you would be satisfied with. ACCEPT the probability, and remember that 30% of a move is BETTER than 100% of nothing (which is what you’ll get when you try get maximum everytime). That is the psychology behind setting TAKE PROFIT; determine what you’re content with, and move on when you get it; you don’t need the WHOLE move to be wealthy, you only need CONSISTENCY.
Cheers
i read the technical analysis for dummies, will read this book that you recommend when i got the time, thanks, pal!
thanks, really helpful comments! very risky what i am doing, if my trade go against me, i will scale in. and wait for the pair to come back again, it can range to few weeks. but when this happen, i will psychologically inclined try to take profit with few pips although i know it’s going down further when i compare the previous support. quite dumb but it just happen to me.
besides, i will also weigh in the big picture of the pair fundamentally.
however, i think candlestick is more accurate for long term rather than short term.
thanks all, 2 cents worth. cheers!:51:
you just answered my doubt, thanks! rather to scrape then losing and nothing. the other day when FOMC and ben speaks, audusd dropped by 100pips in a few seconds, how often does that happen, very seldom in my opinion.:53:
A lot of traders become concerned about ‘catching the whole move’ and forget they are just trying to make money. If you catch some of the move and make $100, its the same as catching the whole of the move and making $100 (I actually would say better because you had larger margin for error).
actually, i am more on protecting my capital. that’s why i take high risk to scale in. cheers!
Why not focus on consistency? By that I mean, If you can get 10-20 pips profit every trade consistently you will be ok. I know it may not sound so “cool” to some because you will think that the more pip haul you can get the better. The more you look for a large pip/profit gain the more you will feel pressure, disappontment, fear, and greed. I know, I have done all that and in return I was not consistent. As soon as I focus more on my consistency no matter how much pip haul it is, I don’t care if I missed the big moved as long as I got what I needed and get out. Though, there will be times that you will feel confident enough to hold on to those large pip and let it run but not until you can proved that you can get out on a winning trade not a losing trade.
Besides, whose counting anyway? I will Focus more on consistent winning trades…
for me even less than 10pips, i am contented cos i have few trades. each trade get me few pips, i am good! i think protecting your capital is equally important as consistency. maybe, apply both to your trade, and you will win. luck plays an important part too, the most pips i have earned is >50pips, that only happened once. :19:
I still couldn’t get the meaning of “protecting capital”. Don’t we all risk capital inorder to gain from it? I just wasn’t sure if that is the right approach in trading to protect the capital…
Also, if you are ok getting out less than 10 pip then you do not need to look for a candlestick to closed…a set Tp will do…
what i mean in protecting capital is do not lose and always ensure your capital is there for you to roll your dice. ya, seems a bit ironical but say you have a capital of 10k, you back 1k on a trade, just make sure that you still have at least 10k after your trade. i think you have to try it, not so simple to explain over words. feel free to addon if you think otherwise. cheers!
As someone that trades Price Action and focuses on candlestick movements, I exit on the following.
If I’m trading a news announcement I will just ride the momentum until it starts to stall. How do I know when it stalls? The price will go from long bars to very short, small consolidating bars like dojis.
If I’m trading in a trending direction; I will just advance my stop every time I gain as many pips as I’ve risked. So if my risk is 100 pips, each time I gain 100 pips, I’ll move the stop up. Eventually, it’ll come back and take me out of the trade.
Don’t worry about trying to find the maximum highs and lows of every opportunity. You’ll never be able to. Just find a consistent way to protect the capital you have and add to it.
It is kinda ironic… I guess everyone have a different approach and I understand that. For me, I never look it that way because I am focusing more on winning trades than protecting my capital…maybe they go hand in hand?
@PipnRoll: The phrase “protecting your capital” is just a different way of saying “risk management”. It’s just a way of making it seem like a more active thing in the mind of the trader. I’m sure you protect your capital by not taking trades that do not fit your trading plan criteria, that have a good chance of success, and that will let you live to trade another day if you have a string of losses.
All of those things are protecting your capital because you’re not just doing whatever and throwing your money into the market to hope for the best.
apply both hand in hand and you will win.:53:
yes, stone is right. it’s psychological, i am more inclined to USD based pair but i am encountering difficulty as to identify good trades? any comments on selecting best trading pair? any good pair for next week? thxs and cheers.
Depends on your trading style but there really is no “best”. If you’re a Price Action trader, you don’t have to limit yourself to just one or two pairs. I check about a dozen every day for set ups because the principles apply to any pair really. It’s just you want to focus on pairs that have enough volatility to move in a timely fashion so you’re not over-exposed in the markets. Additionally, you may feel comfortable dropping to another time frame. I trade on day charts primarily but 4h perform similar but have many more tradeable opportunities. So since there hasn’t been a whole lot on the day charts recently I’ve dropped to 4h for the time being.
It completely depends on your strategy whether or not this will be a good idea. And if you do trade Price Action (since I saw you mention using candlestick signals)… know that once you get under 4h charts the signals can be more misleading due to less information being presented in each stick. So you really want to hunt for the very clear, obvious set ups.
Darmawan, I am currently reading that book. As you know it is based on the stock market, how accurately can it be transferred over to the Forex market? Also, I feel like it is more of a swing strategy than a day trading strategy. Any input on that? I haven’t finished reading it so maybe my answer will come in later chapters.
A trader decides what is the best time for him to enter in market or exit from it. You see chatrs and see support and resistance levels which help you to know when to exit. I try to get 6 to 10 pips profit and come out of the market . I do not go as trend is going on.