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What is your profit-taking point?


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What is your profit-taking point?

  #1 (permalink)
Austin, TX
 
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JohnnyAustin's Avatar
 
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What is your profit-taking point?

Good day and happy Monday everyone. A bit ago I create a trading journal and in that, bluemele suggested I trade not just the ES, but also the YM, 6E, and other instruments. I feel I have a good trading system developed which can be profitable for most situations, but through trial and error I have learned to take profits from the ES every "x" amount of points. However, with the YM and other instruments, I don't have this learned gauge of profit and therefore am unsure of when I should close out a trade.

This then leads me to my question. After how many ticks do you take profits? Is there a rule you have as to how many points of profit you earn before you exit a position? Can you list the instrument(s) you trade and your target profits? After all, bulls make money and bears make money but pigs get slaughtered.

Thanks!

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  #2 (permalink)
Market Wizard
Berlin, Europe
 
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I usually take profits too early.

To make money you need to identify trades with an asymmetric risk profile. If it goes wrong, should be a small loss, if it goes your way should make a killing. To bring home the full potential of this type of trade, it is important to be capable of holding on to the position, for example go for a quarter or half the daily range.

This the secret of the R-multiple, and teachers as Van Tharp advise to look for large R-Mulitples. A R-Multiple of 3:1 or 4:1 is a good point to start. This will allow you to survive with a winning percentage lower than 40%.

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  #3 (permalink)
Buckeye Nation
 
Experience: Intermediate
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Fat Tails View Post
I usually take profits too early.

To make money you need to identify trades with an asymmetric risk profile. If it goes wrong, should be a small loss, if it goes your way should make a killing. To bring home the full potential of this type of trade, it is important to be capable of holding on to the position, for example go for a quarter or half the daily range.

This the secret of the R-multiple, and teachers as Van Tharp advise to look for large R-Mulitples. A R-Multiple of 3:1 or 4:1 is a good point to start. This will allow you to survive with a winning percentage lower than 40%.

For me personally, I don't take a trade unless there is at least a 3:1 potential. I have pivots and watch other support and resistance levels for my profit targets. I also watch the -23.6% fib level as my targets if my entry is based on an ambush entry. However, like I said before, if this -23.6% level does not have a 3:1 potential, I will pass on the trade.

Below is a CL trade I took and shows how I use the -23.6% level as my target. All I am asking for in ALL my trades is a free trade. For my CL trading, I peel off the first car at +10, and then I wait for price to take me off at +1 or my target at -23.6%, next pivot level or horizontal support and resistance. Just my $0.02.

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  #4 (permalink)
Market Wizard
Berlin, Europe
 
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Interesting, if I had to use fibs for that trade I would have used confluence of retracements and expansions as show on the chart below.


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  #5 (permalink)
australia
 
Experience: Beginner
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kulu View Post
For me personally, I don't take a trade unless there is at least a 3:1 potential. I have pivots and watch other support and resistance levels for my profit targets. I also watch the -23.6% fib level as my targets if my entry is based on an ambush entry. However, like I said before, if this -23.6% level does not have a 3:1 potential, I will pass on the trade.

Below is a CL trade I took and shows how I use the -23.6% level as my target. All I am asking for in ALL my trades is a free trade. For my CL trading, I peel off the first car at +10, and then I wait for price to take me off at +1 or my target at -23.6%, next pivot level or horizontal support and resistance. Just my $0.02.

kulu, can I know if you are looking at 3:1 potential how many trade do you usually take a day? What is your stop if you are take the first target at +10? I don't think a stop of less than 10 will work in CL, no?

If there is a high probability setup for a 1:1 trade, you will skip it?

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  #6 (permalink)
California
 
 
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Wouldn't asking for a target (consistently) greater than your risk drastically reduce your odds? Now, not only would you have to get the direction correct, now you've added a profit target to the mix.

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  #7 (permalink)
V/Austria
 
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most important question out there .. when to rake in profits .. (besides placing an SL)


for me i dont have *take profit* points .. i let a position ride till it gets into trouble..

means i could have a position open for years .. if the market lets me.. a open end position so to speak..

i usually pull my SL to break even as soon as possible .. and if the SL is at BE .. i have a open leg of my equity millipede
wich only gets closed .. if for example a trading range forms .. and i analyze it as a turning point .. against my position
i make a point and figure price target calculation.. .. and if my open position is within the danger zone.. i close it..
wichs will smooth out the equity curve ,, u can have as many open psoitions as the market treats u.. i use low risk entrys thou.. but no R:R .. as the reward is open end ..

thats all.. just let the market decide if its time to close .. or let it open.. just participate..

more about buliding an equity millipede can be read in another forum.. good stuff thou ..


gday all

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  #8 (permalink)
australia
 
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PrymeTyme View Post
most important question out there .. when to rake in profits .. (besides placing an SL)


for me i dont have *take profit* points .. i let a position ride till it gets into trouble..

means i could have a position open for years .. if the market lets me.. a open end position so to speak..

i can do the same with stocks holding but i don't see how to translate this into intra-day trading.

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  #9 (permalink)
Israel
 
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A trade is exactly like a 3 leg table. Like with this table you can not say leg one is more important then legs two and three and if I make the leg one shorter or longer the table will be more stable.
The same thing with trades. You have your entry, stop loss and profit taking (profit target or trailing stop).
Most beginners concentrate only on entry point and its wrong.
The same trade with larger stop loss or smaller one can make a huge difference, so for each setup you need to find the right stop loss and profit target.
The RRRatio on it self is not important. You can have a great setup with Risk:Reward of 1:10 and with 10:1. You can talk about RR only in combination with Win%, without it its nothing.
I made a RR calculator, which compares different RR + Win%, but Big Mike took it off the site because it was an exe.

Baruch

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  #10 (permalink)
australia
 
Experience: Beginner
Platform: NinjaTrader
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Posts: 303 since Sep 2010
Thanks: 123 given, 138 received



baruchs View Post
A trade is exactly like a 3 leg table. Like with this table you can not say leg one is more important then legs two and three and if I make the leg one shorter or longer the table will be more stable.
The same thing with trades. You have your entry, stop loss and profit taking (profit target or trailing stop).
Most beginners concentrate only on entry point and its wrong.
The same trade with larger stop loss or smaller one can make a huge difference, so for each setup you need to find the right stop loss and profit target.
The RRRatio on it self is not important. You can have a great setup with Risk:Reward of 1:10 and with 10:1. You can talk about RR only in combination with Win%, without it its nothing.
I made a RR calculator, which compares different RR + Win%, but Big Mike took it off the site because it was an exe.

Baruch

Baruch, I understand your point, if I have a risk/reward of 1:3 but a win % of 30% compared with a risk/reward of 3:1 and a win % 90, the latter will be a better choice.

do you a systematic way to determine the best RR and win% for any instrument and intra day trading?

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