Good entrance with the right volume- is a strong bid to win. But for a good transaction you need to exit the position in time.
Often it happens that the trader closes the position, only after seeing a few percent of the profit, then looking where the price went without it, falls into the power of FOMO, reopens the position at a completely disadvantageous price, and closes it with a minus, which crosses out the initially fixed small profit.
It can be different — the trader doesn’t take 50–70% of profit because he/she is waiting for X2. Or he/she doesn’t take X2, because he/she waits for X3. When the price turns against him/her, already agrees for 50%, but there are no more. Then he/she agrees just for break-even. Unfortunately, the price shows a minus.
All of this makes the trader to do not insidious whales-marketmakers, insiders and other manipulators. His/her two most important enemies are his/her own fear and greed. And if the trader wins them, he/she will get a completely different result from his/her activity.
There are two ways to fix profit on a position: take profit or hands.
I always put a take, as movements can be quite unexpected and short-lived. In addition, it’s useful to set the take in order to develop a useful habit for the trader to trade according with the trading plan, indicating in the Trader’s Diary when opening a target transaction, where profit fixation is planned.
Setting take keeps you from the desire to close a transaction immediately with a small profit. There is a plan — there is a target — wait for the price to reach there. With such an arguments a trader can always defeat his/her fear of losing the small profit, which he/she already has.
When, in that case, should we close the transactions with our hands?
Something has changed dramatically in the market. The achievement of the goal is now less real, or there are reasons to believe that some news, facts/events may turn the price towards a loss. Evaluate if you are not under FUD, and close the transaction with your hands.
The price cannot break through the resistance (or support) that is located between your current position and your target for a long time. If you failed to take the trade twice and there are no significant factors that can affect the situation, close the transaction with your hands.
Your target is in the direction where the whole market stands and it’s still far enough away. Close it with your hands, take what you have, the price in 99% of cases won’t reach the place where most of them are waiting for it.
It’s clear that it is good to answer all these three questions when events are already in the past. It’s always easy to justify behind the scenes why the price has unfolded or why it has continued its movement. In the real market, such moments are always questionable. A mistake is dangerous for a profit, or even loss, if you think about it for a long time.
There are doubts — close part of the position, leave the rest. It’s moving in the right direction — keep it until you reach the take. It’s going in the wrong direction — close the full position.
When you are in the plus side, but you fear a pullback, use the stop to take profit.
Where do I set the “take”?
Depends on the strategy in the first place. In short-term trading, targets are usually set at 500–1000 points. In medium-size trading, the targets are more strategic. I have already given an example of the first target on my accounts — on a short account at the average price of 10697 the first target is 11420 for taking profit. Up to 12006 inclusive 1/3 of the position is closed, from 12K to 13K — half of the remaining, then the stop at 12500 and the target near the annual maximum and above.
On the mid-term account, only the first fixations start above 13K, and 1/10 of the position is closed at 18800. All other targets are considerably higher.
Short teaks, in my opinion, don’t make much sense. The volatility of the crypto currency is high and it’s necessary to try to take at least 30–50% of the movement.
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