EXITS

Exits are very important for traders. because they determine the point which you realize your profits are losses. Setting proper exists in uptrends help you to trade in the direction of the market and prevents early exists. You have to determine your exit method that you will use BEFORE entering any trade and adhere to that plan. Do not change your plan once you are in the middle of the game!.

The following list shows different types of exit methods.

• Profit target : Exit if the market reaches to your target
• Time-based : Exit if your are in the market for a pre-determined time. e.g. 3 days
• Signal-generated: Exit if your indicator gives a sell signal e.g. price drops below 200days moving average
• Trailing : Adjust able stops. e.g. increase your stop upwards as the market moves upwards
• Pivotal juncture : Exist if market approaches to a critical target such as trendline, etc..
• Money management: Closes out a trade at a specified % of adverse movement.e.g. 2% loss
• Volatility: Risk level is increasing due to rising market volatility. Exit half of your position to protect half of your profits.

Resources:
[1] Exits: The Forgotten Component, (05/28/02),Ph.D RM Sidewitz, www.workingmoney.com
[2] A New Look at Exit Strategies, Charles Le Beau
[3] Classic Indicators, Linda Raschke