What kind of exit strategy should we use after the transaction sheet has a profit or loss?- 山城老刁民

What kind of exit strategy should we use after the transaction sheet has a profit or loss?

old troublemaker in mountain city

山城老刁民

There is a proverb in the financial market: those who can buy are apprentices, and those who can sell are masters. Especially in the ever-changing foreign exchange market, when and how to exit is particularly important.

When the position is in a profitable state and the market has gone for a period of time, many traders will feel that they do not know how to operate. Some may get out, others may add, and still others may partially close. Which decision is correct depends, of course, on the market, as well as the trader's goals and risk tolerance.

Here is an exit strategy for you: take some profits, but still hold some positions. In this way, in case the market reverses, at least part of the profit has been made. If the market continues to develop in a direction that is beneficial to us, in addition to participating in the market with the rest of the position, we can still consider increasing the price according to the trend. Therefore, when the market is in a state of consolidation after a period of time, it is still unknown whether the market will continue, and choosing to take part of the profits has at least reduced the degree of risk exposure.

As for the loss position , you must strictly abide by the exit rules, and stop the loss in time according to the risk tolerance of the account. It is difficult for ordinary traders to exit the market at a loss. Traders often think that as long as they do not enter the market, they will have a chance to earn back. Traders are unwilling to accept floating losses as actual losses. When faced with the exit signal, traders often take chances and selectively avoid the exit signal, which leads to continuous expansion of losses, and finally until the liquidation. Therefore, a reasonable exit strategy must include the management of loss positions, and timely settlement of loss positions is also related to the profitability of the transaction.

A reasonable exit strategy should be to exit in batches, we don't need to exit at once. However, many traders mostly take one entry and one exit, completely disregarding other possibilities.

For example, our position is in a profitable state. After the first wave of trends comes to an end, we can first take profits of 1/3 of the position, and leave the other 1/3 of the position in the normal way, and then keep the remaining 1/3 of the position Make the final blow.

When in a state of loss, if the position cannot be closed immediately, 1/3 of the position should be closed immediately, and the remaining 2/3 of the position should be used as a normal stop loss. When we know how to take profits in batches, we can realize partial profits first, but still retain the opportunity to capture the big market.

Last updated: 09/06/2023 07:33

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