Set Targets — One Of The Most Important Thing Of Trading With A Stock Trading Course
Once you are in a trade the question quickly rears its head : How and when do you get out of the trade at a profit ? Setting targets has to be one of the most important parts of your trading scheme, and this is the subject of the next article in our series Stock Trading Course.
Targets can be time-based (I’ll stay in the trade for 3 weeks ) or found on technically (I’ll stay in the trade until my slow moving average crosses over my faster moving average) or based on profit (I’ll quit when I have an open profit of 1000usd ), or found on price (I’ll stop of the trade when it get to the certain price .)
Of the three ways every one has some advantages and liabilities . Technical exits are always available and remove this part of private judgment , but work well only in powerful trends, cause losses in congestion , and almost always leave a lot of money upon the desk. Found on time tools are helpful at times but just as always are net losers , and so shouldn’t be seriously considered as a single tool . Based on profit exits are able to train a trader to take frequent profits but what happens when the trade continues far over your pre-resolute exit point ? This violates the easiest rule of trading: let your winners go.
The best means of selling is to decide price targets but only when these are good based in the market structure and point the market’s existing support and {resistance matrix}. If your plan of trading {takes into account} the natural support and opposition of the market then the aim of yours is going to be sound and your chances of remove everything that the market offers is far higher then with arbitrarily chosen, arranged dollar profit aims (which attend to be emotionally driven ) or a technical moving average tool (which by definition is obliged to leave huge amount of money upon the table ).
How do you set profit aims according to market structure instead of an arbitrary dollar objectives? For someone this is a difficult question but for the trader who has built an understanding of multiple time period structure and the ability to project this support and resistance levels forward in the future , pointing targets is easily done . The first technique is to {use your higher time-period support} and resistance levels (this should usually be one time-period higher than your trading time-period), and to set your target at the coming logical support or resistance level over the current price.
Stock trading course as follows: Say you are day-trading the S&P E-mini contract. You are using a five-minute chart and take a position using your best entry system. The market begins to work in your favor and since you have put on a position with 5 contracts you quickly accumulate a profit of 750usd. You are happy and desire for more and that makes you want to take profits fast , especially as you see in eyes a slight retracement in the 5 minutes chart. But, knowing that market structure is mostly at play, you step backward for a moment and take a look at the everyday and weekly charts. On your Drummond Geometry charts you can see fast that your entry was close to daily and weekly support , at the bottom of the daily envelope and close to the weekly envelope bottom too. You can see that the logical target of this initial move is at the daily PLDot some 9 full points away, and that the improvement of the five minutes bar with its slight retracement is entirely common and continue with the idea that the market has {further upside}. You made a price target at the daily resistance and make a warning to sound when that is full filled, so that you can make money there . You can then further assess if the market will reverse and move back to the first support level or pause and continue to higher level of resistance.
One of the main points is that when researching market structure as opposed to arbitrary dollar value price targets you all the time handle what the market is doing . As a stock trading course teaches, you are in full control because you understand the structural objective all the time as the market flows between its higher time- period support and resistance levels.
