Ways to leave the market

In the trading process, some parts are relatively easy to control, and some parts are relatively difficult to control. For example, we can control the timing of entering the market very easily. Experienced traders can basically control the situation of entering the market on impulse, because experience gives traders the knowledge that traders can set some conditions, enter the market when the market meets the conditions, and refuse to trade otherwise. Obviously, traders have autonomous control over the timing of the trading process. Finding a good entry point is not easy, and the entry point is not perfect, but at this point the trader has control. For example, a trader can require that two indicator parameters and a filter that are usually used must be met, otherwise they will sit at the computer and drink tea.

However, once you enter a trade, control changes. Once you enter the market, you must exit the trade for a certain period of time. Now it is up to the market to control, surprise or fail the trader.

As a case of exiting the market, stop loss is a psychological problem and hardly a control problem because traders (except for position squaring problems caused by large trades) can simply control their losses by setting stop loss points. Many times when a stop loss is triggered, traders may feel calm because they can exit the trade. The number of losses depends on the performance of the trader's system, but traders have absolute control over the size of each loss.

In the face of profits, traders have very little control, but the market has a lot of control. What traders can do, for example, is generally to look for ways to prevent profits from becoming smaller or turning into losses. Traders cannot force the market to give 200 points of profit, but they can ensure that once these profits are made, they will turn around or implement a trailing stop strategy that protects 50% of profits, and use a certain profit at the expense of looking for opportunities to generate greater profits.

In an equation, it could be expressed as the safety of capital, the likelihood of opportunity, 50 percent of a given profit.

This view can have different parameters for everyone. The same entry into the market, due to the departure from the market will also produce different success or failure.

Regarding the protection of profits, would the average person think of a very tight stop loss? In fact, there are many situations where a looser stop loss should be used at the beginning of trading to ensure a certain tolerance for market clutter, and as the trend starts and profits increase, gradually tighten the stop loss to protect profits.

Trailing stops are a method that should be extremely broad in scope. Most trailing stops are specifically designed to achieve the purpose of increasing profits, so these strategies are most effective on trend following systems. In counter-trend trading systems, exit strategies with fixed profits are more appropriate. The trading philosophy of "once there is a profit, put it in your pocket" is very suitable for counter-trend trading because the expected return is limited. However, if the trade is following the trend, then the act of "pocketing profits immediately" will frustrate you: after paying a certain price for finding the trend (usually a lot of small stops), exit the market with a small profit, and then watch the market continue to move in the direction of our trade in the following days or months.