Can anyone give me advice on the best way to take profits?

[mrsoul]

I have never been able to figure out the best way to take profits.
Perhaps there is no best way and you just have to use a certain strategy and stick to it in all cases.
My entries are okay, my stops are okay, but I can't seem to find an optimal way to take profits

For example, this morning I bought the eur/jpy right after the CPI number was released.
I bought it at 132.61, sold my position at 133.20 after it pulled back from 133.30 only to see it shoot right up to 133.90.

To me this is just exasperating and it happens too often.

I've tried scaling out and other methods but I am wondering if there is a BEST way to handle profit taking?

When I have a profit I usually get scared that pullbacks will take the profit away because many times they do just that, so I usually exit too soon.

Maybe if you exit too soon, it's just tough and that's part of the game and there is no BEST wya to handle profit taking.

How do you handle profit taking?

 

[Technically Fundamental]

You cant win em all mate.
if you're going to stick to it I think you have to come up with your own method. I'm struggling too.

 

[foredog]

I don't think there is a right or wrong, but whatever you do you should try to make it so as the ones that really run would have room to run.

Example yesterday snatched profit of 50 from cable, if left would've given 150, or even 200 but 150 if i'd strictly followed my exit strategy, but today there was a similar cable trade (i missed it i was out) which would've run to 50 points before reversing and stopping me out. But out of the 2 trades if i'd followed my method i've been up 150, snatching at it for 50 i'd be up 100.

Over the longer run i think letting em run would return more, but short term you may end up with 4 or 5 breakeven or small losses before hitting a few BIG profits.

 

[virtuos0]

I have never been able to figure out the best way to take profits.
Perhaps there is no best way and you just have to use a certain strategy and stick to it in all cases.
My entries are okay, my stops are okay, but I can't seem to find an optimal way to take profits

For example, this morning I bought the eur/jpy right after the CPI number was released.
I bought it at 132.61, sold my position at 133.20 after it pulled back from 133.30 only to see it shoot right up to 133.90.

To me this is just exasperating and it happens too often.

I've tried scaling out and other methods but I am wondering if there is a BEST way to handle profit taking?

When I have a profit I usually get scared that pullbacks will take the profit away because many times they do just that, so I usually exit too soon.

Maybe if you exit too soon, it's just tough and that's part of the game and there is no BEST wya to handle profit taking.

How do you handle profit taking?

What pullback at 133.20?! There is no pullback, there's just the ebb and flow of price. I had to go all the way down to M1 chart to see any kind of 'pullback'.

I know I'm looking at this in hindsight (I wasn't trading EUR/JPY today), but it's clear that after we moved past the minor resistance at 132.94 this move had tremdendous momentum, the only thing that was going to stop it would be resistance at 133.74. Look at areas of demand and supply.

 

[robster970]

This is going to sound really bizarre, but when I feel like taking a profit based upon some kind of emotional response rather than on a calculated basis, then I actually talk out loud about why I want to take the profit and end up laughing at some of the farcical, emotional and nonsensical reasons that come out of my mouth. It basically allows me to rationalise the situation.

Everybody finds their own way on this one I suspect if you're not playing the fixed exit game.

Just took 18pts on E-Mini so am going to take the rest of the week off now.

 

[Captain Currency]

How do you handle profit taking?

Hello mrsoul,

An idea might be to figure out what type of market you are in first, ie rangebound or trending. Ideally you would want to let your winners run in a trending market. In a rangebound market you may want to take your profits at support/resistance levels.


Andy

 

[mrsoul]

Hello mrsoul,

An idea might be to figure out what type of market you are in first, ie rangebound or trending. Ideally you would want to let your winners run in a trending market. In a rangebound market you may want to take your profits at support/resistance levels.


Andy

Andy you always seem to have something helpful to say unlike many traders on this site who are filled with invective and always make ad hominum attacks.
I don't know why so many traders on this site make ad hominum attacks; perhaps it's because they can't make a living trading and it makes them feel better to take their misery out on other traders.

 

[Gumping]

Entry was more-or-less spot on what I would have done. Would have exited on the break of a swing low which at the time of writing, has not occurred, therefore would still be in.

 

[Black Swan]

I have never been able to figure out the best way to take profits.
Perhaps there is no best way and you just have to use a certain strategy and stick to it in all cases.
My entries are okay, my stops are okay, but I can't seem to find an optimal way to take profits

For example, this morning I bought the eur/jpy right after the CPI number was released.
I bought it at 132.61, sold my position at 133.20 after it pulled back from 133.30 only to see it shoot right up to 133.90.

To me this is just exasperating and it happens too often.

I've tried scaling out and other methods but I am wondering if there is a BEST way to handle profit taking?

When I have a profit I usually get scared that pullbacks will take the profit away because many times they do just that, so I usually exit too soon.

Maybe if you exit too soon, it's just tough and that's part of the game and there is no BEST wya to handle profit taking.

How do you handle profit taking?

What TF you working off buddy?

 

[virtuos0]

Andy you always seem to have something helpful to say unlike many traders on this site who are filled with invective and always make ad hominum attacks.
I don't know why so many traders on this site make ad hominum attacks; perhaps it's because they can't make a living trading and it makes them feel better to take their misery out on other traders.

I am pretty miserable today it's true, it's my anniversary and I had to shell out on flowers and a meal, you got me there!

£40 for a few poxy roses, yer 'avin a larf! I'm pretty sure I'm wasting my time as a full time trader, I'm looking to open a florist now.

 

[DaveJB]

One way to determine where to exit :
Run trendlines along the tops/bottoms of the trend you are trading, moving the lines higher/lower until price touches the lines a 'reasonable number' of times.... ie if long, you run a parallel line above the tops of price bars, for short trades run a parallel line under the lows, and decide via mk1 eyeball where the line should be placed so that in an average trend it will hit the line 2 or 3 times. Depending on chart package you might be able to do this by running a shortish term MA (say a 20 SMA, or perhaps a 10 SMA) and having the charting package draw a parallel line x points above/below the SMA to provide an envelope. (One way that ought to work on most charting packages would be to draw Bollinger bands at various multiples of the standard deviation and see which one fitted the price best). Trial and error, ie a small number of variations on the indicator, should give you an envelope that price hits/crosses a few times during trending periods without the price crossing the envelope limits too frequently/not often enough. On non-trending sections the same idea applies, all you are trying to do is draw lines above/below price to show how far it tends to move on a 'typical' move.***

It's an 'eyeball it' sort of idea, some methods use a fibonacci number offset from a central MA, for example, but you are basically working out a sort of average distance the price moves on a swing and setting your 'take profit' point to be when price gets that distance from the central MA. On a bollinger band type setup you'd exit when price reached the long/short envelope limit and showed signs of reversing... ie price goes to the end of the band (long) hits/touches/exceeds the upper band of the envelope (which would constitute a sort of 'warning, exit imminent' signal) and you exit as and when the bar changes colour and starts going the wrong way.

***typical move - a distance, in points, that you expect the price to move short or long on an 'average' leg - this will tend to vary, so you need to keep reassessing this to make sure that your price chart isn't swinging more/less violently now than it was when you decided the size of the envelope.... you might find your chosen FX pair (for example) moves through bigger swings during uptrends than it does when heading downhill, it reall is a matter of eyeballing it and adjusting your 'take profit' lines.

Oh, just in case it wasn't obvious - take profit when price has passed near to or through your take profit line AND it has started to move the other way.

You can draw multiple lines - one line at a distance you expect most moves to reach, a second line that will be reached quite often, and a third that will occasionally be hit (for example)... three lots traded, exit one lot at each point whilst moving stops under remaining lots up so that if the lower price proved to be as far as you'd get then you don't give profits back.... sort of having a small, medium, and large profit target all running at the same time while stops prevent embarassment.

Dave

 

[montmorencyt2w]

Andy you always seem to have something helpful to say unlike many traders on this site who are filled with invective and always make ad hominum attacks.
I don't know why so many traders on this site make ad hominum attacks; perhaps it's because they can't make a living trading and it makes them feel better to take their misery out on other traders.

Yes, it's very sad. Trading is tough enough without that sort of thing. We get beaten up by
the market and come here for a bit of advice or R&R. The only reason to contribute to this forum is to try to be helpful, educational, interesting, or hopefully entertaining. There is no need for shouting, swearing and screaming. I can get that at home ...

A non-original answer to the original question is perhaps that we just have to accept that we are only going to get a slice of the cake on offer, and not the whole cake. Sometimes better to take what's been offered before it is snatched away.

 

[shadowninja]

I've tried scaling out and other methods but I am wondering if there is a BEST way to handle profit taking?

What other methods have you tried?

You need to get a feel for the instrument you trade and the likely return for setups. If it's happening too often then don't exit so soon.

 

[tenbobtrader]

I have never been able to figure out the best way to take profits.
Perhaps there is no best way and you just have to use a certain strategy and stick to it in all cases.
My entries are okay, my stops are okay, but I can't seem to find an optimal way to take profits

For example, this morning I bought the eur/jpy right after the CPI number was released.
I bought it at 132.61, sold my position at 133.20 after it pulled back from 133.30 only to see it shoot right up to 133.90.

To me this is just exasperating and it happens too often.

I've tried scaling out and other methods but I am wondering if there is a BEST way to handle profit taking?

When I have a profit I usually get scared that pullbacks will take the profit away because many times they do just that, so I usually exit too soon.

Maybe if you exit too soon, it's just tough and that's part of the game and there is no BEST wya to handle profit taking.

How do you handle profit taking?

"TRADING PSYCHOLOGY: Once you have your system parameters set, all else is psychology. That having been said, most traders have emotional problems in the market because they are undercapitalized and/or do not have parameters set. Most traders take on more risk than their capital prudently allows for the same reason that most traders don’t research or set parameters: they are trading to meet needs other than profitability. A successful trader is rule-governed. If a trader does not have explicit rules to guide entries, money management / position sizing, and exits, all the therapy in the world won’t bring a positive slope to the P/L curve."

by Brett


" From my vantage point, all trading ideas boil down to variations on two themes:

1. The market is trending, and we want to buy pullbacks in an upward trend; sell bounces in a downward trend;
2. The market is range bound, and we want to sell moves toward the top of the range once buying dies out; buy moves to the lower end of the range once selling dries up.

If I am employing solid reasoning in my trading, I want to assess the status of those themes in both the time frame that I am trading and in the larger time frame. A trend in a shorter-time frame may be part of a range in a longer frame; a range in the short time frame may be a consolidation within a larger trend. Not infrequently, your ideas regarding targets for a trade will come from the assessment of the larger time frame.

A sure-fire way to identify impulsive trades is by their absence of a well-conceived exit. Ninety percent of the effort is going into getting into the trade—the entry—because the purpose of the trade is to be in the market, not to make a profit. The impulsive trader seeks action, not results. Because exits are associated with the cessation of action, they get short shrift.

Conversely, the reasoned trade contains several components:

1. An assessment of current price behavior: Is buying pressure expanding or contracting; is selling pressure expanding or contracting; is price volatility expanding or contracting?
2. An assessment of market conditions at shorter and longer time frames: trending or bracketing?
3. A target for the trade: A move to new highs/lows for a trend trade; a move toward a price mean for a bracketing trade.
4. Criteria for stopping the trade: Conditions that will convince you that your trade idea is no longer valid
5. A decision of resource allocation to the trade: How much of your capital you are willing to put at risk on the trade idea.

If talking these five components out loud before each trade would lead you to trade less often and would lead you to trade far differently from how you’re currently trading, there is a likelihood that you are overtrading. There is definitely something to be said for having a feel for trading. That doesn’t mean, however, that feelings substitute for market knowledge and awareness"

by Brett


Hi Mr Soul

sounds like you are starting to get a bit emotional - maybe because you do not have all your parameters set in stone yet ?

not at all implying that you have any psychology problems Mr Soul or that they are a factor in your problem

it is an awakening in you, or could be ? a realisation that all is not well

imvho Stop and Target every trade

all this ~ is it is"nt it will it won"t it will not cut it over the long haul

do not battle on until you have resolved it Mr Soul, take a step back and give it some real thought

it can get very emotional and there is really no need to go there imo

Andy

 

[barjon]

mr soul

I'm not sure if you are trading fully discretionary or with a set of defined rules. If the latter, then you should have exit rules as well defined as those for your entry. In the same way that your entry rules won't always "work", so you must expect your exit rules to do the same and you might find it useful to work up a re-entry strategy to cater for that. Such a strategy may be similar to your primary entry strategy or something very different.

For example, my entry strategy relates to retracements, but I have a couple of break-out strategies for re-entries.

fwiw my exits go something like this, although it's a bit more complicated if I have made additions:

1. First target - monetary - at 1:1 where I close half my intial position with stop on remainder moved to break even (thus ensuring a profit).

2. Second target - pattern - at appropriate support or resistance where remainder closed.

3. If price moves on to break that s/r then I re-enter with half position if my break-out rules permit.

Hope this helps a bit.

good trading

jon

 

[gamma]

When exiting a trade which is near my take profit level I go down to the lower time frames (5 min)and watch price action
I hope this suggetion is of help.

 

[robster970]

If the market is range bound, entry at top/bottom of range, exit at corresponding bottom/top of range. If direction looks like it is going against you then exit with a scratch trade. So exit options are either SL (if wrong at start), scratch or target from S/R for the range.

If instrument is trending then set targets at 2 & 3 x risk. If it moves further that 3 x risk then let market decide when to take you out by looking at your chosen timeframe and waiting for a close below the low of the previous 20 period high (long) or close above the high of the previous 20 period low (short). Look at higher timeframes too before making this decision as it may be a pullback on your timeframe but within a strong trend on a higher timeframe.

Discretion needs to be applied to change of direction when range bound and also the jump from 2-3 x risk when trending and whether you think it will make the leap between the two levels. That's just down to understanding the market you're trading.

If you're range bound and think there will be a breakout and want to trade through the breakout too then the price acceleration through the S/R line will give you and indication whether to keep position open or close out. Acsertaining whether the line is being tested, poked or being railroaded through is for me more art than science and takes into consideration what the market has been doing within the last 24hrs or so.