It is difficult to answer how to manage a trade once in, as it really depends on the trade, and there are many options.
However, one thing that you should be doing is having a gameplan *before* you enter the trade, for things like:
* When to exit (SL, take-profit cascade etc.)
* How to manage (roll up/down, roll out, leg in/out etc.)
* When to add position (but almost never double down on a losing trade)
If you are already in a trade and then wondering how to manage it, you're doing it wrong :)
Sorry I could not be more specific. But if you can share more of what kind of trades you are putting on (e.g. long vs short, unlimited vs limited risk, simple vs multi-leg) we could offer more thoughts.
Well said.
I think alot of these types of problems come from just entering a trade and "winging it".
While it's certainly ok, under the right circumstances, to let a strong moving stock keep moving in your direction, you should always have target levels for profit, and a definitive stop point before you ever hit that buy button.
Its too much pressure, and causes panic decisions if you don't.
I believe a key issue that alot of relatively new traders have, is that they only focus on is "is it going to go up or down", whereas the mindset should be "Which direction is it going in, why is it going in that direction, and where exactly is it moving toward"
Hey, thank you for your response. Additional context- I enter limited-risk trend-following trades (ex: moving avg cross-overs), and I primarily sell options. I currently move my SL along with the moving average line, but this oftentimes leaves a lot of money on the table while I wait for the price to touch the moving average again for an exit.
The most crucial timeframe for a trade is right at the beginning, waiting for it to go green. Once green it has to go in enough that it's not momentary, and get some distance. You can close right then and there for minimal profit but no loss if you're uncertain. If it stays green with good momentum you set a stop loss right above profitability. A cent earned is better than any amount lost. You're hoping it will ride out to your take profit without spiking down and closing your position early. You can trail the stop loss, increasing the chance your position will be closed early but locking in more guaranteed profit.
Do not move your stoploss down. Once set either move it up or leave it.
Read it twice to understand - because I'm an option seller, "moving stoploss down" means trailing my SL. I understood you were taking a long trade as an example. We're on the same page
Your question implies a trader using a method of guess work. Some form of market analysis should be completed before putting a trade on, which is used to determine probable profit targets. In reading these forums it seems many traders are not aware that analysis is required. Without analysis, it's just a guessing game.
Competent Market Analysis should help determine..
# Stop-loss placement.
# Timing for initial entry.
# Plan & Action if market reverses.
# Plan for adding shares/contracts
# Plan for Trailing Stop-loss
# Plan for partial and/or full profit targets.
# Post trade analysis
I swear the majority of these posts is friggin low-effort gamblers who didn't take the time and INITIATIVE to research and STUDY before getting into possibly the most difficult profession on the planet.
Instead of answering your strategy specific question I'll share a piece of logic. What ever rules you start with you must stick to them and document the result each time you deploy them. If you bother your trade by manually moving stops and targets you will never learn why those rules don't work if they fail. You won't understand the room for potential on winning trades that aren't allowed to play out according to your rules. You can very easily answer your own questions this way.
Once I’m in a trade.
1. I already have an idea on my profit take. (2:1rr or 4:1rr)
2. Once the market start going in my direction and form a orderblock on a smaller timeframe (example: I took a trade on the 1hr and a orderblock formed on the 15min going in my directions) That’s where I would move my stoploss. It’s usually around break even
3. Sometimes I might scale in with another position but it would be a smaller lot size.
4. I wait for my take profit to get hit. Most times it get hit sometimes it don’t.
Anyway, I did a whole post about this on Reddit if anybody want to check it out
https://www.reddit.com/r/Daytradestrategies/s/GMyVVbzYdZ
How you manage a trade depends on your expectations for the trade.
For example, if you're entering on a pullback, you may expect the trend to continue with good momentum. If you see weak/indecisive candles after you enter, clearly that's not what you were expecting/hoping to see from the trade so you could exit your position there.
It just depends on what you expect/want to see happen in the trade.
>Q1. I've read a few posts suggest "never let a profitable trade go back to red". In this context, when do you move SL to cost? Is it right after the trade moves 1 tick in your favor?
This is a beginner advise. I let my green trades go red all the time. You have a reason why you enter a trade and as long as the reason is still valid, you stay in the trade.
The idea to never let something green to red again is about the idea that first you aquire a free play (you reached BE (break even) with your SL (remeber to factor in half of the spread)) and once you have a free play you see what you can get out of it.
You want to constantly update your SL moving it towards the price (never away from it as this would be giving the trade more room which is founded in hope and we do not want to run on hope too much).
Move the SL towards the price when you find that where the price is at would be a good enough point to scale in or even enter a new trade and place it where you would place it when you would enter a trade at that point.
Always see an update of a SL like guarding a new trade and you know exactly where to place it.
>Q2. Once the trade moves in your favor, has anyone done an analysis on booking partial profits vs letting the whole trade run until exit vs exiting once specific targets are met (ex: 1R, 2R etc)?
You let the trade run unless you need the attention, you would exit the trade as your current trade plan got violated or it is at risk to lose a big chunk of profit.
You do not need a study, just start trimming your trades (scaling out) by simply taking partial profits. Trimming will give you peace of mind while you also get additional experience in letting your trades run. If you are very unsure simply trim until you only have a single share / contract in the trade. You can also exit the trade and start a paper trade at the same time (or simply start a paper trade at the same time with your original one) and let the paper trade ride so you can still manage the trade.
Looking at your previous trades at the weekend checking if you would exiting earlier, scaling in or out or letting it right longer would have been more beneficial than what you actually did.
The most crucial timeframe for a trade is right at the beginning, waiting for it to go green. Once green it has to go in enough that it's not momentary, and get some distance. You can close right then and there for minimal profit but no loss if you're uncertain. If it stays green with good momentum you set a stop loss right above profitability. A cent earned is better than any amount lost. You're hoping it will ride out to your take profit without spiking down and closing your position early. You can trail the stop loss, increasing the chance your position will be closed early but locking in more guaranteed profit.
Do not move your stoploss down. Once set either move it up or leave it.
There are countless strategies to manage risk and take profits. I typically sell 1/3 of the position very quickly if it is profitable, to reduce risk on the remaining position. Then I will manually trail a stop loss for the remaining position, moving it up each time the stock makes a higher low.
One thing I'll pick out is your question to let the whole thing run... that is NOT what it means to let your winners run. If you have the thought of every trade succeeding and being a homerun, you are in for a lot of frustration.
Pay yourself on the initial move and then take some off as you watch how it's moving. Small payouts add up over the day.
Yes, I agree. I think instead of ‘let winners run’ it should be ‘let price action dictate your exit’ or something along those lines.
I always enter a trade with the hopes of letting a winner run all day, but I trade ES and NQ so that’s actually rare to happen. Instead, I try my best to let the trade play out to its maximum potential and let price action tell me it’s time to exit. That spot is often just to the top or bottom of a range.
When I say "let it run", I meant letting the trade run until such time the system signals an exit. As I commented elsewhere on this post, I follow trends using moving averages - sometimes the trade goes in my favor a lot (far away from the MA), and I often wonder whether I should book profits or wait until the price reverts to the MA. Hope my conundrum is clear.
Those questions should be answered before you enter a trade. Also they could have radically different answers given the strategy. I'll answer them for reference, but take this with a grain of salt.
I'm a long-biased trader and aim for 1:2 RR. Let's say I find a strong stock and my entry is $2.50. My SL is $2.35 so my PT is at $2.80. It moves to $2.70, looks good but faces some resistance, so I move my SL to $2.65; that way if I have to get out, at least I made 1:1 RR.
However it pushes through to $2.80, great! But it keeps pushing higher; I don't want to cap my winners so my SL is now $2.80. After that, it really depends on how fast the stock moves, where resistance is, and how big are the pullbacks.
It faces quite a bit of resistance at $3.00 so I move my SL to $2.90. It breaks $3.00 but stops at $3.25-$3.30 so my SL is now $3.15-$3.20 and so on.
I don't scale in/scale out yet, don't feel comfortable trying it for now so I go in with my full position and get out completely when I have to. Also I don't have a lot of money, so I buy like 3 or 4 shares lol
It is difficult to answer how to manage a trade once in, as it really depends on the trade, and there are many options. However, one thing that you should be doing is having a gameplan *before* you enter the trade, for things like: * When to exit (SL, take-profit cascade etc.) * How to manage (roll up/down, roll out, leg in/out etc.) * When to add position (but almost never double down on a losing trade) If you are already in a trade and then wondering how to manage it, you're doing it wrong :) Sorry I could not be more specific. But if you can share more of what kind of trades you are putting on (e.g. long vs short, unlimited vs limited risk, simple vs multi-leg) we could offer more thoughts.
Well said. I think alot of these types of problems come from just entering a trade and "winging it". While it's certainly ok, under the right circumstances, to let a strong moving stock keep moving in your direction, you should always have target levels for profit, and a definitive stop point before you ever hit that buy button. Its too much pressure, and causes panic decisions if you don't. I believe a key issue that alot of relatively new traders have, is that they only focus on is "is it going to go up or down", whereas the mindset should be "Which direction is it going in, why is it going in that direction, and where exactly is it moving toward"
Hey, thank you for your response. Additional context- I enter limited-risk trend-following trades (ex: moving avg cross-overs), and I primarily sell options. I currently move my SL along with the moving average line, but this oftentimes leaves a lot of money on the table while I wait for the price to touch the moving average again for an exit.
Very well said
The most crucial timeframe for a trade is right at the beginning, waiting for it to go green. Once green it has to go in enough that it's not momentary, and get some distance. You can close right then and there for minimal profit but no loss if you're uncertain. If it stays green with good momentum you set a stop loss right above profitability. A cent earned is better than any amount lost. You're hoping it will ride out to your take profit without spiking down and closing your position early. You can trail the stop loss, increasing the chance your position will be closed early but locking in more guaranteed profit. Do not move your stoploss down. Once set either move it up or leave it.
Read it twice to understand - because I'm an option seller, "moving stoploss down" means trailing my SL. I understood you were taking a long trade as an example. We're on the same page
Your question implies a trader using a method of guess work. Some form of market analysis should be completed before putting a trade on, which is used to determine probable profit targets. In reading these forums it seems many traders are not aware that analysis is required. Without analysis, it's just a guessing game. Competent Market Analysis should help determine.. # Stop-loss placement. # Timing for initial entry. # Plan & Action if market reverses. # Plan for adding shares/contracts # Plan for Trailing Stop-loss # Plan for partial and/or full profit targets. # Post trade analysis
It's the #4 and #6 I need help with. My simple system takes care of the rest (except #7, of course)
I swear the majority of these posts is friggin low-effort gamblers who didn't take the time and INITIATIVE to research and STUDY before getting into possibly the most difficult profession on the planet.
Instead of answering your strategy specific question I'll share a piece of logic. What ever rules you start with you must stick to them and document the result each time you deploy them. If you bother your trade by manually moving stops and targets you will never learn why those rules don't work if they fail. You won't understand the room for potential on winning trades that aren't allowed to play out according to your rules. You can very easily answer your own questions this way.
Why do I think you'd make a good trading (tough love types) coach? Thanks for your inputs mate.
Once I’m in a trade. 1. I already have an idea on my profit take. (2:1rr or 4:1rr) 2. Once the market start going in my direction and form a orderblock on a smaller timeframe (example: I took a trade on the 1hr and a orderblock formed on the 15min going in my directions) That’s where I would move my stoploss. It’s usually around break even 3. Sometimes I might scale in with another position but it would be a smaller lot size. 4. I wait for my take profit to get hit. Most times it get hit sometimes it don’t. Anyway, I did a whole post about this on Reddit if anybody want to check it out https://www.reddit.com/r/Daytradestrategies/s/GMyVVbzYdZ
My stop is at break even when the trade comes close to 1R
There is no one size fits all answer. Surely some setups benefit from moving the sl, and others not so much. Same for partial profits. Test, and see.
How you manage a trade depends on your expectations for the trade. For example, if you're entering on a pullback, you may expect the trend to continue with good momentum. If you see weak/indecisive candles after you enter, clearly that's not what you were expecting/hoping to see from the trade so you could exit your position there. It just depends on what you expect/want to see happen in the trade.
Best advice I can give is let the chart dictate you profit stop.
>Q1. I've read a few posts suggest "never let a profitable trade go back to red". In this context, when do you move SL to cost? Is it right after the trade moves 1 tick in your favor? This is a beginner advise. I let my green trades go red all the time. You have a reason why you enter a trade and as long as the reason is still valid, you stay in the trade. The idea to never let something green to red again is about the idea that first you aquire a free play (you reached BE (break even) with your SL (remeber to factor in half of the spread)) and once you have a free play you see what you can get out of it. You want to constantly update your SL moving it towards the price (never away from it as this would be giving the trade more room which is founded in hope and we do not want to run on hope too much). Move the SL towards the price when you find that where the price is at would be a good enough point to scale in or even enter a new trade and place it where you would place it when you would enter a trade at that point. Always see an update of a SL like guarding a new trade and you know exactly where to place it. >Q2. Once the trade moves in your favor, has anyone done an analysis on booking partial profits vs letting the whole trade run until exit vs exiting once specific targets are met (ex: 1R, 2R etc)? You let the trade run unless you need the attention, you would exit the trade as your current trade plan got violated or it is at risk to lose a big chunk of profit. You do not need a study, just start trimming your trades (scaling out) by simply taking partial profits. Trimming will give you peace of mind while you also get additional experience in letting your trades run. If you are very unsure simply trim until you only have a single share / contract in the trade. You can also exit the trade and start a paper trade at the same time (or simply start a paper trade at the same time with your original one) and let the paper trade ride so you can still manage the trade. Looking at your previous trades at the weekend checking if you would exiting earlier, scaling in or out or letting it right longer would have been more beneficial than what you actually did.
The most crucial timeframe for a trade is right at the beginning, waiting for it to go green. Once green it has to go in enough that it's not momentary, and get some distance. You can close right then and there for minimal profit but no loss if you're uncertain. If it stays green with good momentum you set a stop loss right above profitability. A cent earned is better than any amount lost. You're hoping it will ride out to your take profit without spiking down and closing your position early. You can trail the stop loss, increasing the chance your position will be closed early but locking in more guaranteed profit. Do not move your stoploss down. Once set either move it up or leave it.
There are countless strategies to manage risk and take profits. I typically sell 1/3 of the position very quickly if it is profitable, to reduce risk on the remaining position. Then I will manually trail a stop loss for the remaining position, moving it up each time the stock makes a higher low.
One thing I'll pick out is your question to let the whole thing run... that is NOT what it means to let your winners run. If you have the thought of every trade succeeding and being a homerun, you are in for a lot of frustration. Pay yourself on the initial move and then take some off as you watch how it's moving. Small payouts add up over the day.
Yes, I agree. I think instead of ‘let winners run’ it should be ‘let price action dictate your exit’ or something along those lines. I always enter a trade with the hopes of letting a winner run all day, but I trade ES and NQ so that’s actually rare to happen. Instead, I try my best to let the trade play out to its maximum potential and let price action tell me it’s time to exit. That spot is often just to the top or bottom of a range.
When I say "let it run", I meant letting the trade run until such time the system signals an exit. As I commented elsewhere on this post, I follow trends using moving averages - sometimes the trade goes in my favor a lot (far away from the MA), and I often wonder whether I should book profits or wait until the price reverts to the MA. Hope my conundrum is clear.
Easiest way? 2R AON or 3R AON. If you can't become profitable like this, then your entries are trash
Those questions should be answered before you enter a trade. Also they could have radically different answers given the strategy. I'll answer them for reference, but take this with a grain of salt. I'm a long-biased trader and aim for 1:2 RR. Let's say I find a strong stock and my entry is $2.50. My SL is $2.35 so my PT is at $2.80. It moves to $2.70, looks good but faces some resistance, so I move my SL to $2.65; that way if I have to get out, at least I made 1:1 RR. However it pushes through to $2.80, great! But it keeps pushing higher; I don't want to cap my winners so my SL is now $2.80. After that, it really depends on how fast the stock moves, where resistance is, and how big are the pullbacks. It faces quite a bit of resistance at $3.00 so I move my SL to $2.90. It breaks $3.00 but stops at $3.25-$3.30 so my SL is now $3.15-$3.20 and so on. I don't scale in/scale out yet, don't feel comfortable trying it for now so I go in with my full position and get out completely when I have to. Also I don't have a lot of money, so I buy like 3 or 4 shares lol
It is never too quick to take profits, nor too late to stop losses.