High Probability Trading Strategies

CHAPTER 7

Exit Strategies and Trade Management

Sound and logical trade management and exit strategies are the key to maximizing the return on each and every trade. In this chapter you will learn how to manage the trade from entry to exit, including how to adjust the stop-loss and exit the trade.

Up to this point, you've learned how to identify the optimal conditions for a trade setup and the objective entry strategies, including the exact entry price and initial protective stop-loss price. Identifying good entry setups is only one part of a complete trading plan. But you can't make a single dollar with the best entry strategies. You only make money on a closed trade. There can be an enormous difference in your net success depending on how well you manage the trade and your ability to consistently stay with a trend until the market conditions suggest the trend is at its conclusion.

The maximum return you can gain from any trend is entirely dependent on the market. That's right. You don't have control of how far or long a market will trend. You do have control over how long you stay with a position, so the best you can gain from a market trend is to be able to stay in a position for the majority of the trend. I would like to be able say I'm going to teach you how to stay in every market position from the early stages of a trend to the later stages. I can't do that, because no matter how good your technical analysis and trade management, the market will often give information that ...