When to manually exit a trade?

Hi All, I am new to babypips and have almost completed my school of pipsology.

I am demo trading, and i had streak of 4 losses in a row averaging $25 (Demo account is $5000 and my maximum i risk is 1%), I exited b/c of loss of confidence and the trade was not going anywhere and fear of loosing another trade. Due to this i missed my profit target of 120 pips but also another 200 pips :frowning_face:

An area I find challenging is when to exit a trade manually. Part of your strategy is to determine entries and exits. You can exit bc stop loss or target profit hit. how do you know a trade is going against you before hitting your stop loss and exit manually? before hitting maximum loss on the trade?

Have you backtested your strategy? I found that until I started backtesting it was hard to have faith and confidence in how I was trading which in turn led to me intervening and not letting my trades play out.

Sounds like you have the right idea and are being sensible with a 1% risk per trade cap, what makes you feel you can’t let the trade play out and just hit the SL? Fear of loosing so much? Maybe reduce your risk to 0.5% and see how that effects your emotions.

In trend-following I get out if price suddenly does well or suddenly does badly. For example if a pair in an uptrend makes 6 consecutive higher closes in your selected trading time-frame and in the last 150 bars of the same uptrend it has never done this before, its probably time to see price as over-extended and get out. Likewise if the trend weakens by 2 or 3 consecutive lower closes, its worth getting out in case this is more than a pull-back. Of course, in both cases there’s probably going to be an opportunity to get back into the same trend, probably almost immediately.

You can work out your own “triggers”, these are just helpful to me.

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You look left and use a HTF mid, open or close or a high or low to exit.

For example, depending if you are short term trader, entry on a 15 min chart and target a 4 hour extreme points or mid point.

If you use fibs extensions then use those that coincide with a H4 level.

I’m only trading trends, channels or sideways range and not based on certain technical indicators triggers being met, so it’s abit difficult to back test entry and exit, but I’ll look back at the trend and study look at resistance and support levels. I’ll use stochastic to gauge if it’s oversold/overbought but my primary method is price action and looking at charts.

I agree with your view - technical indicators (apart from MA’s) do not help with trend-following strategies.

First of all, u are using a stop loss of 1%. what this means is, in that trade you are willing to lose 1% of the deposit ,for the profit. Once set like this, you should not change your mind. I have seen many people changing mind like this. When the trade start to go against them, they drag the SL away HOPING the market will turn into profits, in the end , ending up with huge loss in that trade. In that place he would’ve lost his initial risked money only had he was DISCIPLINED in his trading. In another case, when the market start moving against, u closed your trade before hitting your SL, out of fear of losing money. What if the market turned into profits as soon as u closed it manually? So, a good trading system is the one with a pre-determined SL, enter according to your rules, set your SL, place your TP & move away from your trading device. Now, for targets, I will be using Fibonacci extensions.

When the reason why you entered the trade in the first place is no longer on your screen, it is an indication for you to exit.