Stock Day Trading – How To Get Out Of The Trade At Profit

If ever or whenever you are making a trade the question quickly appears:  How and when do you get out of the trade at a profit ?   Aiming targets has to be a very important part of your  trading scheme, and this is the subject of the next article in our series Stock Day Trading.

Objectives can be based on time (I'll stay in the trade for three weeks ) or found on technically (I'll stay in the trade until my slow moving average across  my faster moving average)  or  found on profit (I'll leave when I make the open profit of $1000 ), or based on price (I'll leave of the trade when it reaches a certain price .)

Of the 3 methods each one has some advantages and liabilities .  Technical exits are always available and remove the element of personal judgment , but act well only in effective trends , cause losses in congestion , and almost all the time leave a number of money upon the table .  Found on time tools are helpful at times but just mostly are net losers, and so cannot be seriously taken as a solo implement .   Found on profit exits can train a trader to make frequent profits but what happens when the trade keeps going far above your pre-decided exit point?  This violates the simplest rule of trading: run as soon as you win .

The best meaning of quitting is to decide aimed prices but only when these are soundly based in the market structure and show the market's existing support and {resistance matrix}.  If your trade plan {takes into account} the natural support and resistance of the market then your aim will be good and your chances of taking out all that the markets gives is much more higher then with arbitrarily chosen, fixed-dollar profit aims (which attend to be driven by emotion)  or a technical moving average tool (which by definition is compelled to leave much money on the desk ).

How do you aim profit targets according to market structure instead of an arbitrary dollar objectives?  For somebody this is a difficult question  however for the dealer who has built an understanding of multiple time period structure and the ability to project the support now and resistance levels forward in the coming days, directing targets is easily finished . The basic skill is to {use your higher time-period support} and resistance levels ( it should usually be one time-period higher than your trading time-period), and to direct your targets at the next logical support or resistance level over  the current price.

Stock day trading as follows: Say you are day-trading the S&P E-mini contract.  You are using a 5-minute chart and take a position using your best entry system. The market begins to move in your favor and because you have 5 contracts to put on a position you quickly accumulate a profit of 750usd.  You feel glad and feel a bit greedy and that makes you want to get profits quickly , especially as you see a slight retracement in the 5 minutes chart. But, understanding that market structure is always at play, you step backward for a period and view the daily and weekly charts. On your Drummond Geometry charts you can quickly see that your entry was close to everyday and weekly support , at the last of the everyday envelope and close to the weekly envelope bottom too.  You see that the logical target of this initial move is at the daily PLDot some 9 full points away, and that the advancement of the five minutes bar with its slight retracement is totally common and consistent with the idea that the market has {further upside}. You set a price target at the daily resistance and set a warning to sound when that is full filled, so that you are able to take profits here .  You can then further assess if the market will reverse and step back to the original support level or pause and keep going

to higher level of resistance.

The point is that when watching market structure as opposed to arbitrary dollar value price targets you mostly take the control of what the market is doing. As a stock day trading course teaches, you are in full control since you know the structural target mostly as the market goes between its higher time- period support and resistance levels.