Better to close out & take a profit? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

ECN && STP && Scalping && Hedging - Broker Review - Oct 2009 24 replies

Profit From Profit-Taking —Scalping the Session Close 21 replies

Request EA for auto Take Profit or Close Position near level price .00 .25 or .50 3 replies

Would you take profit with 500pips profit or? 26 replies

Would you take profit with 500pips profit or? 3 replies

Better to close out & take a profit?

  • #1
  • First Post: May 11, 2010 6:09am May 11, 2010 6:09am
Hello,

Last night before going to bed, my open positions were over 320 pips on my demo. I set my t/p and s/l then went to bed. This morning when I woke up, I had a net gain of 179 pips. 3 out of the 4 positions had triggered the s/l, one had triggered the t/p.

If this were a live account would I have been better off closing these positions when they were up?

Is it better to take some profits and close out my positions or should I have set a trailing stop?

Any advice is greatly appreciated.
  • #2
  • May 11, 2010 7:21am May 11, 2010 7:21am
Quoting foxypips
Hello,

Last night before going to bed, my open positions were over 320 pips on my demo. I set my t/p and s/l then went to bed. This morning when I woke up, I had a net gain of 179 pips. 3 out of the 4 positions had triggered the s/l, one had triggered the t/p.

If this were a live account would I have been better off closing these positions when they were up?

Is it better to take some profits and close out my positions or should I have set a trailing stop?

Any advice is greatly appreciated.
It is both difficult and easy to answer. Difficult because what works well for one person may not work well for others. Risk tolerances and profit appetites will vary however I will share my view.

For the past 16 months or so I have in all my trades taken a portion of profit and allowed as much as I can to run. I took most of the methodolgy from Peter Crown's and Joel Rensinks works on Alpha trading (my understanding of it) and the best way to have longer positions run. The main course is to render a trade with an initial stop loss position (that is taking profits that allow the initial SL to stay where it is) to be a free trade or partial win if the market reverses.

So an example would be in the case of a 30 pip SL, you are looking for a Take Profit on 50% of your position at 30 pips PLUS spread charges so usually around 32 pips or more. So in the case that the market travels the distance to the TP point and then reverses, the worst outcome is Breakeven on that trade. It allows for the opportunity to have a longer trade in play with the mindset of it being a free trade. From that point on you can trail the remainder in a number of ways be it Long term Moving average, fixed trail stop or positioning the SL below or above the most recent High/low.

The above can be used with variations. For example if the markets moves are aggressive then you may opt to remove a smaller portion at a higher Take Profit level (ex: 25% off at 2x risk). This allows for a larger position to run with a substantial distance between the current market and your SL or you could go the other way and take off more at a lower point, which works well in the case of you taking a trade during quiets times and having to leave. The other option, which I use when the markets permit it is to place the SL for the initial 50% off (or whatever portion) after the market has moved past the point and traveled some distance. The benefit being that I can move my SL up (on the initial trade) when the markets are moving fast therefore locking in profit, much like the example above and leaving a greater portion in play with a SL at a further distance.

That is my scope and it has worked quite well. Bear in mind though that there are implications as there are in all forms and avenues of trading. I have witnessed some good profits turn to either nothing or smaller profits in the quest for looking at larger targets. Saying that, I have also seen greater targets hit in the past year that have done great things for account growth. In the end you will find just as many replies to questions of this nature as you would find for those looking for a flawless system, it is up to your judgement as to which suits your style more.

Razor
  • #3
  • May 11, 2010 9:37am May 11, 2010 9:37am
no one can give you a clear answer on this one. This depends on the trader, time frame, how volatile the market is, etc, but one important think to consider: there will always be another trade. Don't be greedy or don't feel sorry that you missed that giant move or lost 100 pips because it hit your s/l. There always be another trade, a thing most traders tend to forget a lot while they chase "the big one"
Twitter: @forexpokerpro
  • #4
  • May 11, 2010 10:24am May 11, 2010 10:24am
Thanks you guys both so much.

I guess it is an individual thing. I would rather take the 320 pips, close the trade and knowing I can always make more trades the next day when I see a trade setup rather than be greedy thinking there is more to be made and get none. This way I am also at ease knowing I took a profit and not a loss.

Now that I think about it, this would make me feel much better as suit my personal needs as a trader.
  • #5
  • May 11, 2010 4:39pm May 11, 2010 4:39pm
Quoting foxypips
Thanks you guys both so much.

I guess it is an individual thing. I would rather take the 320 pips, close the trade and knowing I can always make more trades the next day when I see a trade setup rather than be greedy thinking there is more to be made and get none. This way I am also at ease knowing I took a profit and not a loss.

Now that I think about it, this would make me feel much better as suit my personal needs as a trader.
Forget the talk, you need to be greedy. You dont know what will happen the next day so to 'just take' X amount because it is enough and the next day 'will' offer you more chances doesnt always pan out, however it is your choice. Greed can be misinterpreted and depending on your view, what you read can be misguiding.

It is not greedy to take 600 pips if the market offers it to you regardless of what most people are happy taking. Scalpers and intra day players are usually happy with the smaller gains at smaller risks, however there are no rules to state that the smaller risks cannot enjoy larger rewards which is all I look to do when I take partial profits and leave a trade to its own devices. Looking back on history can be a beautiful thing especially when you can see where your trade signals would have produced larger rewards.

Best of luck to you and whatever method you find I hope you have comfort with it.

Razor
  • #6
  • Edited 8:33pm May 11, 2010 7:07pm | Edited 8:33pm
Quoting Razor_trader
Forget the talk, you need to be greedy. You dont know what will happen the next day so to 'just take' X amount because it is enough and the next day 'will' offer you more chances doesnt always pan out, however it is your choice. Greed can be misinterpreted and depending on your view, what you read can be misguiding.

It is not greedy to take 600 pips if the market offers it to you regardless of what most people are happy taking. Scalpers and intra day players are usually happy with the smaller gains at smaller risks, however there are no rules...

So you are saying I should be greedy? I don't get it. I should have passed by $100 sitting on the ground to look for more and only find a penny? I am seriously not following that logic. I should leave 320 pips to get 180 pips because I am supposed to be greedy?

"What you read can be misguiding"
I am not sure what you meant by saying this, could you please elaborate?

A lot of the posts on this forum could be interpreted as "misguided". One person is saying that you HAVE to blow your first account out. Another says blowing out your accounts is not a necessary step to becoming a successful trader. So, I pretty much have to go with what works for me.
  • #7
  • May 11, 2010 8:47pm May 11, 2010 8:47pm
Quoting foxypips
So you are saying I should be greedy? I don't get it. I should have passed by $100 sitting on the ground to look for more and only find a penny? I am seriously not following that logic. I should leave 320 pips to get 180 pips because I am supposed to be greedy?

"What you read can be miguiding"
I am not sure what you meant by saying this, could you please elaborate?

A lot of the posts on this forum could be interpreted as "miguided". One person is saying that you HAVE to blow your first account out. Another says blowing out your accounts...
Some misinterpret greed as risking more than they can handle per trade, some also believe in multiplying there account 3 or 4 fold per year. All I meant by this was to have the opportunity for greater profits. It is not easy and it is not for everyone as there are times where aiming for higher profits leads to less profits (ie you get stopped out for less). However not being able to read the future it is only the afterthought that says either 'I knew I should have closed that trade with 320 pips' or the other 'why did I close that trade I knew it was going to run'.

The analogy of passing by the $100 is open for interpretation however if the $100 represented a gain of say 10% on your initial or progressive bankroll then I would be looking to lock in some of the $100 and look for the next note. If the $100 was less than 1% ie less than your initial risk, then by picking it up you have more or less taken less than your risk if you understand my scope.

There are times when you will miss the hundred and have to take pennies, but there is nothing like the opportunity at zero cost for a larger stake. Now take the above example of yours: 320 pips is a great deal, of pips that is however the monitory value is what counts. For some 320 pips may represent alot for example a trader with modest capacity that had an initial risk of 30 pips. There position may be loaded and there trading is done on lower TFs. The same capacity for a daily chart trader would be different because there initial risk may have been 120 pips so there position size is a mere fraction of the first traders. The first trader would have realised about 10x growth while the second would have achieve just over 2x. Different scenarios play by different rules.


My intentions are just to illustrate my views which may conflict or support others. I trade with the initial goal to have a trade that is free, that is in the worst case scenario of the trade being stopped out I loose nothing, my account balance will in most cases grow albeit very slightly. However the pay off is that I can leave the trade and its SL in its original location and if the trade survives a few days then I can manage the profit then. Do I take losses- Of course I do, do I leave some trades that run backwards on me and stop me out for zero or small gains, you bet but I have also had trades that have gained a great deal of % for me that have made things easier. If it the best way- yes for me it is for others though, well that is up to them to decide but that is all I meant by greed. The opportunity for a larger swing trade that nets a margin far greater than most achieve.

Razor
  • #8
  • May 11, 2010 9:03pm May 11, 2010 9:03pm
Quoting foxypips

A lot of the posts on this forum could be interpreted as "misguided". One person is saying that you HAVE to blow your first account out. Another says blowing out your accounts is not a necessary step to becoming a successful trader. So, I pretty much have to go with what works for me.
If people believe they need to blow accounts in order to be successful then they probably believe that you need to get hit by cars in order to learn how to cross the road.
  • #9
  • May 11, 2010 9:05pm May 11, 2010 9:05pm
Quoting foxypips
Hello,

Last night before going to bed, my open positions were over 320 pips on my demo. I set my t/p and s/l then went to bed. This morning when I woke up, I had a net gain of 179 pips. 3 out of the 4 positions had triggered the s/l, one had triggered the t/p.

If this were a live account would I have been better off closing these positions when they were up?

Is it better to take some profits and close out my positions or should I have set a trailing stop?

Any advice is greatly appreciated.
In the ideal world you would be able to exploit your trades to achieve maximum profit every time. I do not mean catching the exact top and bottom of a trend (for example if you were a trend trader), but taking the maximum pips on offer if you were to follow your trading plan, and if that trading plan was built upon vast knowledge of your chosen markets and many years of experience that culminated in near-perfect realisation of the "capability" of your method - including but not limited to reading the offering of the market on any given day and determining what your contract sizing, entry level(s), exit level(s), etc, should be.

The above is a nice ambition, but then there is reality. As others will tell you, there is no fixed answer to your question - but my advice is that you should make those decisions based on the emerging realisation of what sort of trader you are or what sort of trader you want to be. A brief summary of my own experiences might help to illustrate what I mean:

Some years ago, like many new traders, I sought to find a way to squeeze the maximum potential profit from every trade I took - so it was all about points per month, or points per year - it took me a while (too long, I suspect) to see that this was my main problem... But what I evetually realised, is that I was a far better and far happier trader by taking smaller chunks out of the market, with a greater win rate - "high probability trading with modest returns per trade" is what eventually felt right to me.

But then the setting of my entries, exits and contract sizing was not based only what "felt right" but also about understanding what the capability of my set-ups was so that I could trade with confidence knowing that I was not putting too much at risk, or leaving too many potential points on the table with every trade type/set-up that I chose to execute.... and maintaining an awareness of the evolution of the market so that adjustments are made with attributes like increasing or decreasing volatility - this is about reading yourself, reading the market, and making informed decisions that usually come from many years of experience.

So the above is the "story," but at a practical level it is about lots of practical analysis (of different scenarios), lots of market observation, lots of self analysis, lots of hard work, lots of experience, and a fair bit of patience too...
  • #10
  • May 12, 2010 3:03pm May 12, 2010 3:03pm
It really depends on your way of trading. In my case, I set a weekly goal. And plan my trades according to that goal, my goal is of 200 pips, and I can get that amount in 3-5 trades, being conservative on the money management. I set my stop loss at around 50 pips, and I shoot for 50 pips. If i get the 200 pips a week, Im increasing my account in 10%.

I find it better to have goals than to just trade to see how many pips you can get. I find it better to keep some order in such a free environment as trading these markets.
  • #11
  • Last Post: May 12, 2010 6:00pm May 12, 2010 6:00pm
Quoting ForexVSA
It really depends on your way of trading. In my case, I set a weekly goal. And plan my trades according to that goal, my goal is of 200 pips, and I can get that amount in 3-5 trades, being conservative on the money management. I set my stop loss at around 50 pips, and I shoot for 50 pips. If i get the 200 pips a week, Im increasing my account in 10%.

I find it better to have goals than to just trade to see how many pips you can get. I find it better to keep some order in such a free environment as trading these markets.

Thank you for this information, it was actually really helpful. That is what I was thinking of doing. I will try this out and see how it works for me.
0 traders viewing now