Multiple Exit Methods On Closing A Trade
In this post we will discuss overview of the different exit plans that you can do to close a trade. With a pinch of creativity, you can explore different ways of using them. Some of the exit methods can give you mediocre result. Some are hard to implement but with perseverance you may possibly achieve them with high winning rate, and Most of the these exit methodologies should be implemented with extra care as it can do harm to your fund if not executed with a good overall plan.
- Hard Stop-Loss - Success Rate: Poor, many traders have been evangelizing the use of hard stop-loss, but do you know that poorly plan stop-loss is more risky and harmful than a trade with no stop-loss. Don't get me wrong, I'm not saying that a stop-loss is a bad idea. It is actually a good idea to use this but if you use it just because your basis are just simple supports, resistances, or ATR, then you are in big trouble. It should be more than that.
- Dynamic Stop-Loss - Success Rate: Poor on slow reversal, Excellent in sudden reversal, this is a calculated hidden stop-loss that gets triggered when there is a very quick reversal like the flash crash. The dynamic stop-loss is a proprietary concept by the one who discovered it, so it can not be discussed here. It is a method that can not be implemented manually. The good news is a tool is available online that you can use as a complete exit tool for your scalping. It includes the dynamic stop-loss. You can download it from this link. https://www.mql5.com/en/market/product/27235.
- Hedging - Success Rate: Good, in implementing this method, you can use the hedging trade with the same lotsize as the original open trade or you can use higher lotsize. Escaping the hedge is the hardest part. The best tip that I can give you is to plan how you can reach the break-even point then you can decide if you still want to profit from it or close it to free you from stress and just start over again. The first step in escaping the hedge is to analyze again the general direction of the price then take appropriate action to at least reach the break-even point.
- Averaging - Success Rate: Good, in this method you have to open more trades at a specific time interval to average profit until it becomes positive. The best way to implement this is by combining it with a very good entry plan that determines the general direction. Do not implement it right away if the analysis of the direction is still aligned with the position. When the trade reverses that's the time you put the averaging to work.
- Grid - Success Rate: Good, this is somewhat the same with averaging because you also need to open more trades here and you also need to average them. The difference is you don't do it at a specific time. You have to open more trades with a specific distance, so trades are lined up like a grid. The best way to implement this is the same with Averaging.
- Trail Stop - Success Rate: Good, this is already available in MT4. It is good in preserving your profit when the price moves along the direction of your position. Explore more this feature then you will discover that it does not only save your profit. It does more.
- Cut Loss - Success Rate: Very Poor, to some of the traders, they panic when a trade goes south. They resort to this when they can no longer think of something to do to save their losing positions. I would say if a trader does this. He doesn't have a complete trading plan. He analyzes only how to enter a trade but doesn't bother to think about how he can complete that trade by planning first how to exit it before opening the trade.
Research more on how you can do the exit methodologies I listed above. Google is your friend. You will not get the exact answer from Google but you will surely get the hint to complete your plan. The best tip that I can give to you for your success is try to combine two or more of these exit methods, you will discover new angles of ideas that you never thought before.
