As mentioned in the preceding post, Trade Management is relatively much simpler if you have prepared comprehensively. It helps to work to a plan and bring objectivity. It comes into play after the trade is executed and is to do with placing Stop Loss and Profit Targets on the system, and exiting the trades at pre designated times when the price action is adverse.
Here is how it works as per our Trading System:
Stop Loss (SL) and Profit Target - The SL and Profit Targets have to be put on the system as soon as the trade is executed. This would have been already tabulated by you as part of Trade Preparation (refer relevant post in this section). While the SL needs to be put for all the lots, the profit targets need to be put by each lot.
Risk Management - Move SL to entry as soon as the target on the second lot is met.
Exit Management - For trades executed on C4 @5PM, check C6 @ 9PM. Exit if the candle is adverse even if SL is not hit. For example, for a long trade on C4 @5PM, if the completed candle C6 @9PM is a Bearish Engulfing or a Reverse Hammer pattern, exit. Repeat for trades executed @7PM. Once a trade in a particular commodity is exited at a loss (because SL gets hit or adverse candle forms), do not enter that commodity again during the day Exit all trades @11PM. No carry forward. Be ruthless about it.
Never take the market for granted. Always be very strict about putting your SL and Profit Targets on the system, not in your mind. Once put, do not tamper with it unless the trade gets eliminated.
Trade management calls for attention during specific time frames as above. Try not to look at the screen in the interim as that can impact human emotions and be counter productive. The maximum loss that can happen is already predetermined so you should be mechanical about your trades.
Follow this routine with a lot of discipline, diligence and honesty. You will be surprised by the results! Actually, you are allowing the market to work for you instead of getting carried away by emotions.
This is the last post on the topic of Trade Mechanics. Please click on "Next Post" to move to the next section - An Introduction to Setups on 2H charts.
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