Trade Exit Techniques
Setting strict rules for when to exit is very important
STOPS FOR FUTURES TRADING= 12-16 tick max (trend trades generally have 12 ticks. Sometimes the high-volume area entries use 12 to max 16 if needed to be “beyond” the areas the market should not go.
PROFIT TARGETS- $200 & $400 – unless runner left on due to triple trigger strong outside- lock in $200 @ $400- runner always ends with divergence or 1st or 2nd Fibonacci areas when triggers weaken. Some new traders may opt for 10 and 20 ticks profit when starting out. You will quickly learn when you take more or less money dynamically by reading your indicators and trading the expected outcome as discussed in the example trading plan provided to you in the educational material.
AFTER $200 PROFIT is achieved, any trigger line that is weak on the 13-2 or 8-range chart (small inside large) then exit the trend trade after a divergence on the 5-1 chart becomes true.
TRIGGERS DETERMINE WHEN TO HOLD FOR LARGER MOVE: When all charts have small triggers (outside), the large triggers in trend direction, move stops to a no loss and then exit with preset targets or Fibonacci areas. LOCATION OF 5-1 VS LARGE TRIGGERS + STRENGTH OF 8-RANGE TRIGGERS IS KING! It is imperative that your focus remains on the indicators that help you in your trade not the "divergence" that has no chance of causing a loss. See the example below.
Focus on small vs large location on 5-1 and strength of 8-range trigger to guide you
WHEN PRICE REACHES one-to-one (1:1's) on 5-1 chart, move the stop to BREAK EVEN. It is ok to exit 1st profit at the one to ones if close to $200 profit per contract or better. See an example of this below:
Strong triggers allow large targets to be reached
LARGE CHART MID BAND: may act as first profit targets for any counter-trend trades or HVA trades. You will have to pay attention to this area when there is a large trigger gap between mid-band and triggers.
Super imposed 13-2 mid band on a 5-1 chart to illustrates 13-2 mid-band as an exit area
EXIT if any 5-1TERMINATION CONDITION is true especially if wrong color background.
5-1 chart termination conditions that are exits as well as entry techniques
When the background color is wrong for trend trades, or small triggers are strong against the trade, tighten stop or exit position if divergence is true: If triggers are strong, FAVORING, you can ignore the divergences. Only those hurting your positions as dictated by triggers or background color should be used as exits.
exiting when background is wrong color with divergence
The following example is how to manage a trade when the market does not continue and divergence is present, this will prompt an exit.
trading breakouts and manage with divergence example ( trade shortened for educational purposes)
Trading into termination conditions taking profit and management example
Sometimes the small chart fails before the strength in the larger 13-2 chart does. You will need to recognize this and manage your trades appropriately.
Even with 13-2 strong triggers- you can see change happening at the 5-1 chart termination areas
If and when the small chart resumes the uptrend, recognizing termination conditions allows you to look for a 2nd chance entry. Trading after the small triggers roll on the small charts and are in line with support such as Fibonacci or mid bands. HVA lines from the T3 Market Flow may also be used in this type of situation. here is an example of this concept from April 1, 2021
when to start trading with trend again after termination
When taking edge trades, it is very important that the large triggers on the 13-2 chart are watched closely for exits. It is ok to take some profit at the large triggers. The market will have a tendency to fail when the trigger lines are not exceeded. An example of this is shown below.
Watch the trigger lines as a "line in the sand" for edge trades
Location of the small triggers relative to the large triggers on the 5-1 chart in combination with a very strong 8-range trigger line configuration will be instrumental in the decision to stay in a position or exit with divergence. In the example below, the trigger lines are favorable to staying in the position.
Trigger location on 5-1 and Strong Triggers on 8-Range charts determine if you should exit with divergence
Using the range chart trigger lines for entry and exit management of trend trades may also be useful when more than one divergence is present on the 5-1 chart. Traders face having to choose to stay in or exit with two divergences on the 5-1 chart. This is where the "context" of the market is important. A good top on the 13-2, plus wide down triggers, plus 8-range small triggers being strong and located below all other triggers staying in the trade may be a viable option. It is also helpful if there are Fibonacci areas helping to provide a roadblock to the market getting your stop.
exiting with divergences or lowering risk and staying in based on 8 range triggers
Please spend some time reviewing the following video which discusses entry and exit management in greater detail.
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