What Criteria Will You Use to Exit a Trade With a ProfitOnce you reach this stage you are starting to get into the nitty-gritty of trading. Market makers generally make only a few ticks on the majority of their profitable trades. On the other hand, long-term trend followers often need to ride major trends for a long time in order to maximize their profitability. Once again this is a personal decision but it is important to make some decisions ahead of time for several reasons." First, oddly enough, one of the most difficult things for many futures traders to do is to ride a winning trade. When you get into a trade that immediately goes in the right direction the desire to "take the money and run" can be overwhelming. It can also be a huge mistake. For example, if you are a trend following trader who generally experiences 60% losing trades, you absolutely have to have some big winners in order to offset the majority of smaller losses you incur along*the way. If you take profits too soon on a regular basis you are essentially shooting yourself in the foot by doing exactly the opposite of what you need to be doing given your chosen approach to trading. (The "hard work" of trading usually involves making and sticking to difficult decisions. Fighting off the urge to cash out a winning trade when your approach tells you to hold on is a perfect example of his type of "hard work.") On the other side of the coin, if you are a counter-trend trader - selling into rallies and buying on dips - you may need to take profits more quickly before the trend turns back against you. |
Lack of Trading Plan |
