The winning trades I share with you today are full of learning opportunities on the profit-taking side. Continued learning is fundamental for my trading profitability to continue improving.
The first winning trade was on Gold.
A pennant pattern had been drawn, and immediately after a bullish candle had broken out of the pattern, where the breakout candle had little or no wick, I entered the trade. When setting the stop loss, I allowed some wiggle room. This entry was exactly in line with my rules for a breakout strategy and was executed well.
The chart below, showing subsequent price action, is where my mistakes were made.
From the original breakout, price shot to the upside into a zone where price was consolidating and forming a bearish M pattern. In this zone, my profits were 4-5 times my original risk on the trade. My rules are to take a percentage of profits when I hit approximately 5 times my risk and move my stop to break even.
I rode the trade and eventually exited for a profit of only £14. This should have been a much higher yielding trade. Very disappointing.
The next trade was actually a profit on a Cardano crypto trade that I had opened on 1 January. A similar story in relation to profit-taking.
The entry is a clear breakout from a descending wedge pattern, where the price was being pressurised into a narrow chamber.
I rode the price increase up into the zone where I marked the support area. At this point, I was in profit at 5 times my initial risk amount ($600). I am supposed to take a portion of profits off the table under my profit-taking rules. I didn't. See what happened next:
I had originally written on the chart that if a 4-hour candle closed below support I was to exit the position. I ended up closing my entire position in the zone shown in the chart. What I should have done was to exit 20%-50% of my position when price had given me a 5R unrealised return and closed the remaining trade as soon as a candle had closed below support. I still realised a profit but not the level of profit I should have.
Two winning trades where I didn't follow my profit-taking rules. The trading year has just started, my primary focus from hereon is to prioritise adhering to my profit-taking rules.
How do you manage profit-taking?
Trade Clearly!
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