How to Plan Trading – Optimizing the Exit Strategies

How to Plan Trading

It is essential for you to identify the spot trading opportunities. Likewise, it is also crucial for you to determine the best trading price for making an entry or exit. Adopting specific risk management techniques is useful for making a profit. You must utilize all opportunities to minimize losses and help your account sustain in the long term.
Exiting a trade has two options only. You may either exit trade with a good return or at a loss. This article aims at providing an insight into both situations.

Exiting trade with a loss

Earning a profit with each trading opportunity may not be easy for most successful investors. If you can’t get on well with your initial moves, you must get a plan in place. You must restrict your risk-taking ability to a certain point. Also, understand why it’s essential for you to exit a useless trade instead of waiting for a market turnaround in a presumed direction. You must gain a deeper understanding of the entry and exit by studying the breakout, pullback, and trend methods. You may use a stop loss for trading more effectively. It will help you acquire a safety shield against losses.

Trading with a stop loss

You may consider setting a stop loss below the lowest of the latest breakout when you make an entry following a pullback. It will help curve potential losses. Assume stop loss at a point wherein the market assumes your initial prediction to have gone wrong. It could mean an event when the pullback proves to be either a reversal or a much deeper pull-back than assumed. You’re likely to suffer a smaller loss while exiting with this strategy.

The worth of risk that you may bear

Professional traders are known to undertake risks lower than 2% of the entire volume of equity present in their trading account on a single instance.

Exiting trade with a good return

You may consider a few opportunities for exiting with a good performance. These are a few rare opportunities that every trader must explore. There are a few advanced technologies that can help you determine the right level for closing out your trade.

Assuming limit orders

You may close the trade manually. You may even set the limit order to a level of profit in advance. Your position will meet an end when you reach that level. Apart from helping you in becoming more focused and disciplined, it will keep you from overreaching profits while following a particular trading plan.

Most trading platforms help in setting your profit level after checking the latest range of resistance or support. They will help set the profit level a bit lower than the levels achieved in the recent past.

You will not have to move out of this trade in just a single move. You may lock in profit and lower the position gradually. You can do it by utilizing limit orders or try it manually.

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