Take-Profit placement is based on the principle that “Successful Trader is not the one who MAKES the most pips but the one who KEEPS the most FASTER”. That’s why it is of critical importance to secure our profits as fast as possible before price action cancels most part of them during its minor fluctuations or major moves.
Having set our Trading Plan, we already know that we can turn $1000 into $1Million after 10 Doublings and have already estimated the 10 Doublings’ Milestones and noted them on our Calendar.
Therefore, by securing each Day’s Pips we’re on our way to our GOAL already and any extra pips we can make are a BONUS.
A practical rule to maximize profits within the shortest possible time interval is to place our TP at the 2/3 of estimated Move’s -REWARD’s- length. By doing this, we keep more pips than our Daily Pips Target, FAST.
STAY-IN and EXIT Criteria are the two sides of the same coin and actually coincide.
1) STAY IN while candlesticks CLOSE above/below Tenkan Sen. EXIT when one candlestick CLOSES to the opposite side of Tenkan Sen.
2) STAY IN while Median BBand goes UP/DOWN. EXIT when Median BBand turns FLAT.
3) STAY IN Long while Stochastics go UP. EXIT if they make a Bearish Crossover above 80-level line. STAY IN Short while Srochastics go DOWN. EXIT if they make a Bullish Crossover below 20-level line.
4) STAY IN Long while Kijun Sen goes UP. EXIT when Kijun Sen goes DOWN. STAY IN Short while Kijun Sen goes DOWN. EXIT when Kijun Sen goes UP.
5) STAY IN Long while PSAR Dots go UP. EXIT when you see the first PSAR Dot above price action (ideally on the immediately smaller Time-Frame). STAY IN Short while PSAR Dots go DOWN. EXIT when you see the first PSAR Dot below price action (ideally on the immediately smaller Time-Frame).
6) STAY IN Long while price is moving above the KUMO. EXIT when Kijun Sen starts going DOWN. STAY IN Short while price is moving below the KUMO. EXIT when Kijun Sen starts going UP.
7) STAY IN Long while MACD Bullish Histogram Lines grow taller ABOVE Signal Line. EXIT when MACD Histogram falls below Signal Line (ideally EXIT when there is inconsistency between Bullish MACD Histogram’s Line and Signal Line because Bullish Histogram’s Line is shorter but Signal Line goes UP). STAY IN Short while Bearish MACD Histogram Lines grow bigger BELOW Signal Line. EXIT when MACD Histogram jumps above Signal Line. (ideally EXIT when there is inconsistency between Bearish MACD Histogram’s Line and Signal Line because Bearish Histogram’s Line is smaller but Signal Line goes UP)
8) STAY IN Long while candlesticks are closing ABOVE Alligator. EXIT when one bearish candlestick closes below Alligator’s Lips (Green Line). STAY IN Short while candlesticks close BELOW Alligator. EXIT when one bullish candlestick closes above Alligator’s Lips (Green Line).
Depending on Market’s Condition and the Strategy we’re using, there may be some additions or modifications to our STAY-IN /EXIT Criteria.
STEP #7 Rules :
Two Traders can trade the same pair simultaneously, one BUYING, the other SELLING and BOTH of them can be profitable. The difference is in the TIME OF EXIT and in Traders’ Mentality. Lets say that Trader A BUYS from DAILY Time-Frame because he sees a nice Upward Move. He EXITS 5 Trading Days later having made 260pips. Trader B SELLS from H1 Time-Frame trading a Downward Correction. He EXITS4 Hours later having made 80pips. I mention this REAL LIFE example -which you can DEMO Check for yourself anytime you want- to prove to you the fact that everything depends on Your Way of thinking. The Market is always the same just like the Sea is always there. You determine your way of trading just like a captain determines his way of sailing. If you are an extremely energetic individual, Scalp from M5/M15 keeping your finger ready to hit the mouse giving the “close position” order, trade from M30, H1 or H4 Time checking when each Candlestick Closes to see if your EXIT Criterion is met and BE FAST. If you are a sophisticated Trader with the mentality of an investor switch gradually from lower Time-Frames to Higher Ones, slowly trail your SL to Break Even level and then…..be PATIENT. Let the time work for you. As trade matures, accumulating pips, you’ll be checking your trade only to see if you can add position.
While you are a Beginner, trade only Trending Market’s Conditions, Trend-following from relatively higher Time-Frames (Daily, H4 or H1) that give you enough time not only to check if your Entry Criteria are met before you Enter, but also to make sure that your STAY IN Criteria are met and EXIT the right time. Trend-following may last days or even weeks. Trading a Range-Bound Market or Swing-Trading is a good match for a more experienced Trader , not because of its technical skills requirements -it’s based on extremely simple principles- but mainly because Swing Traders have no Bullish or Bearish Biases on the pair they’re trading. They don’t hesitate a single moment EXITING when the move is over and RE-ENTERING by Reversing Position. Scalping from M5/M15 Time-Frames is a trading style you should follow when you are an experienced Trader. I would suggest you go Scalping only after you have successfully DOUBLED your Account’s Equity at least 4 times. When Scalping, everything is allowed. You may enter when a M15 candlestick opens and EXIT three candlesticks later without waiting for the last candlestick to close. With Scalping, you practically RE-WRITE the rules and you’ve got to EXIT at FLASH-SPEED 🙂
Most Traders experience LOSSES not because they Entered Wrongly or they Exited Wrongly either. They are hit by the Market’s Euphoria Syndrome right after they EXIT keeping profits. This Syndrome disarms reasonable thinking, you forget about Entry Criteria and the only deafening voices shouting inside your mind are the ones saying “I WANT MORE PIPS….AND I WANT THEM NOW!” The result of the Euphoria Syndrome is that you RE-ENTER to the Wrong Direction and as Market starts moving against you, your reflexes are still numb from the winning feelings of the previous profitable move and you hate the idea of jumping out with minor losses which soon turn into ….devastating ones. When you realize you’re trapped in a Reversal, your profits have turned into losses and now your Equity is bleeding. In most of the cases, your Euphoria-damaged psychology doesn’t allow you to think reasonably and hedge your losing position making the necessary effort to recover your Account. Most killed accounts died right after a period of great profitability due to the Euphoria Syndrome that led to Wrong RE-ENTRIES after Right EXITS. To avoid that, if you are so filthy ambitious that you want to take ONE MORE TRADE after you just EXITED a profitable one, WAIT at least 5 CANDLESTICKS till you make a new Trading Decision. You can thank me later 🙂