DETERMINE EXIT STRATEGIES
Traders have various choices when it comes to exiting trades. Some traders use “trailing” stops as their exit strategy of choice, while others choose to exit when the stock hits a certain target percentage, or breaks through a support or resistance level. Some traders will choose to exit based on expected news releases. The exit strategy is one of the most important parts of any trading plan, and it is important for traders to have an exit plan before entering a trade. In the event the market turns against you, do you have a strategy that will protect your capital?
You must be ready to take your profits and cut your losses. Do not hang on to any beliefs based on your ego or your fantasies when the market is not moving the way you expected it to.
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