Hello guys, I would like to discuss about management of winning positions (exit strategies). Since I focus on intraday or short term trading (mainly H4 but sometimes H1), I am trying to automate the trading process to the max (witch for me would be about 80% of the trade done by automated rules) so that there is zero emotion considering trade management. I am stuck at the «management of a winning position” part of the process and I would like some help / input or comments from other forum members. (I would describe the process as trend following even though this is subjective H4 trend can be sideways at Daily chart, a trend in H1 can be sideways at H4 chart and counter trend at daily chart)
I’ve got some thoughts I’d like to share before I get any input from you. There are roughly 3 ways of managing a winning position I’m thinking at the moment. Let’s assume that the positions are 1:1 in terms of stop loss and take profit. (the ratio can easily be changed so please don’t concentrate on that)
1) Opening a position with a 1:1 SL take profit ratio .Self explanatory. Open a position (4H chart) set 80pip stop loss and take profit and forget about it.
2) Opening a position with a 1:1 but including a trailing stop at a fraction of your target. For example a 100pip take profit and a 50 pip trailing stop along with 100 pip stop loss. The reasoning behind this strategy is that it lessens losses at sideways market movement. If the price doesn’t reach the take profit and retraces to the stop loss the trade will have 0 losses if it moved 50 points in our favor and profit if it moved more than 50 but not the full 100. Disadvantage: big retracements will get you out of a winning trade with zero or small profits and you wont benefit from price going even higher. What kind of trailing stop would you prefer using? SAR , ATR, native metatrader?
3)Managing winnings as thus : After the trade wins specific number of pips , close a fraction of the trade and move the stop loss to break even. Close next fraction of the trade with a trailing stop or even better when your trend indicator reverses. This way you will get the whole movement but only with a fraction of the position. This can be made in 3 parts by closing another part of the position higher than the 1st closed fraction and leave the last fraction with a trailing stop or when indicators reverse.
That’s how far I’ve gotten so far. I would really appreciate any input considering the performance of those strategies or, of course another strategy that works even better.
Cheers , thanks in advance.
p.s Please don’t concentrate on the stop loss management of the trade I got that covered
I’ve got some thoughts I’d like to share before I get any input from you. There are roughly 3 ways of managing a winning position I’m thinking at the moment. Let’s assume that the positions are 1:1 in terms of stop loss and take profit. (the ratio can easily be changed so please don’t concentrate on that)
1) Opening a position with a 1:1 SL take profit ratio .Self explanatory. Open a position (4H chart) set 80pip stop loss and take profit and forget about it.
2) Opening a position with a 1:1 but including a trailing stop at a fraction of your target. For example a 100pip take profit and a 50 pip trailing stop along with 100 pip stop loss. The reasoning behind this strategy is that it lessens losses at sideways market movement. If the price doesn’t reach the take profit and retraces to the stop loss the trade will have 0 losses if it moved 50 points in our favor and profit if it moved more than 50 but not the full 100. Disadvantage: big retracements will get you out of a winning trade with zero or small profits and you wont benefit from price going even higher. What kind of trailing stop would you prefer using? SAR , ATR, native metatrader?
3)Managing winnings as thus : After the trade wins specific number of pips , close a fraction of the trade and move the stop loss to break even. Close next fraction of the trade with a trailing stop or even better when your trend indicator reverses. This way you will get the whole movement but only with a fraction of the position. This can be made in 3 parts by closing another part of the position higher than the 1st closed fraction and leave the last fraction with a trailing stop or when indicators reverse.
That’s how far I’ve gotten so far. I would really appreciate any input considering the performance of those strategies or, of course another strategy that works even better.
Cheers , thanks in advance.
p.s Please don’t concentrate on the stop loss management of the trade I got that covered
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