This is a question I have been asked many times.
So, I decide to use a live trade that I am vested last night to illustrate the various ways to take profits.
You can see on this 1H chart that I have used the traditional risk/reward ratio and the trend line (pink dotted line) to compare.
If you use the RRR method, you can see that you risk 1 and now you are gaining nearly 2 or you have a 1:2 RRR, so to speak.
In the past, I relied on this traditional method and that I do not maximise my profit taking but rather let the ratio number influenced me. So, I would say 1:3 or 4 is very good and in some trades after closing and a few days/weeks later, I realised it had gone to 1:8 or more had I held on to it.
So, with the pink line as a guide, so long as the price stays inside (left side) and does not break out, there is no reason to take profits. In short, stay till the trend changes.
Let's see if the price action will reach 1:3 as shown or more later following the pink dotted line.
Also, at this time, I would adjust my trailing SL to around 2576 to lock in partial profits. That way, I do not need to keep checking the price and can move on to other pairs. Worst case scenario, I know I have some profits in my pocket.
Do not be overly fearful in setting this trailing SL or you might get stopped out earlier than you thought. You do not want that as each time you are taken out, you have to sell at a lower level and risk a higher chance of a rebound , also taking you out. Some authors advocate setting it at breakeven level. There is no right or wrong here. For me , I like to be rewarded with some money for the effort that I put in, simple as that. Even a dollar makes me happy!
So, I decide to use a live trade that I am vested last night to illustrate the various ways to take profits.
You can see on this 1H chart that I have used the traditional risk/reward ratio and the trend line (pink dotted line) to compare.
If you use the RRR method, you can see that you risk 1 and now you are gaining nearly 2 or you have a 1:2 RRR, so to speak.
In the past, I relied on this traditional method and that I do not maximise my profit taking but rather let the ratio number influenced me. So, I would say 1:3 or 4 is very good and in some trades after closing and a few days/weeks later, I realised it had gone to 1:8 or more had I held on to it.
So, with the pink line as a guide, so long as the price stays inside (left side) and does not break out, there is no reason to take profits. In short, stay till the trend changes.
Let's see if the price action will reach 1:3 as shown or more later following the pink dotted line.
Also, at this time, I would adjust my trailing SL to around 2576 to lock in partial profits. That way, I do not need to keep checking the price and can move on to other pairs. Worst case scenario, I know I have some profits in my pocket.
Do not be overly fearful in setting this trailing SL or you might get stopped out earlier than you thought. You do not want that as each time you are taken out, you have to sell at a lower level and risk a higher chance of a rebound , also taking you out. Some authors advocate setting it at breakeven level. There is no right or wrong here. For me , I like to be rewarded with some money for the effort that I put in, simple as that. Even a dollar makes me happy!
Note
Praise Lord. By his grace, we had pocketed 3 times rewards by taking 1 time of risk. You probably may have sold off at 1700 hours when the wick of the green candle breaks out of the bearish trend line. I was busy, so I waited and profited more, haha. If you are concerned, you can take partial profits and let the remaining run. It is possible that it goes further south towards 2467 or 2413. We have Non farm payroll data coming up in less than an hour.
All the best traders !
Note
bloomberg.com/news/articles/2020-03-31/gundlach-says-stocks-to-fall-beyond-lows-reached-in-marchAnd here is what the Bond King says .......
One of the reason I focused more on chart than news is because I find inconsistency in what they say. At times, what they said is vague, a hazy picture but because they are "somebody" , so the media grants them interview and retail traders drool over their inputs.
I hope I have demonstrated through hundreds if not thousands of my charts that relying on trend line, supports ,resistance and a bit of common sense is sufficient to pick up crumbs left over by the big boys.
You may not be a multi-millionaire over night but with constant practice, hard work , commitment, I believe your financial goal is within grasp.
All the best , traders !
Note
Praise Lord for we have made more than 3 times of the returns for investing in 1 times of the risk. Redraw your bearish line to touch the high of 1 Apr 2300 hours candle and you will see the line is still intact.This morning, it is likely to pull back so you may want to cash out your profits or reduce your positions, adjust your trailing SL.
Congrats to all who followed.
Note
If you look at your entry , it was 01 Apr 0300 hours. You can still make 1:3 risk reward ratio even if you closed your position on 03 Apr 0200 hours. The point I am making is once the trend is established, be it bull or bear, it will follow quite close to it without much gyration as you see with your own eyes. For 2 days, you can just check the price level, adjust the Sl and go back to sleep. How long does that take you ? 5 mins if you are fairly new.
Intraday trading by the minutes, say 5-15 mins may be fun and exciting but it will takes a toll on your health. Why ? Simple. Easy come easy go. Tell the person who win 4 figures profits in 5 mins to stop and close shop , go home and sleep.
Most likely, he will continue and that is when Mr Market slowly takes over the winner role. Oh, yes, I had tried that and swear never to do it again.
In the above trade, I am comfortable with 1:2 or 1:4 risk reward ratio. That means , putting 1k to gain 2k or 4k back. That is equivalent to someone's monthly salary that you just made in 2 days. And you are not satisfied ? Want more ?
Sure, if you can stomach the risks.....Learning to be content with your profits in trading requires discipline, believing to leave some money for others to earn as well.
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Related publications
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.