Take Profit or Take Profit on a Position Trading
We already saw that it is very important to manage the losing trades, but to be consistent and profitable, it is also important to properly manage the winning trades. Take profits, but probably with the time to be lost.
The take profit is as a stop but profits, when the price reaches a certain level it gets us out of the operation. You’re perhaps thinking ” but then there should be the trailing stop? And the answer is it DEPENDS. If you do day trading, you know that the prices move very fast, therefore it is more likely that you use the take profit to exit in a given target according to your trading plan. If you do long or swing, you may use but the trailing stop. Whatever you do, you can use any of the two. Each one has its advantages and disadvantages. In the case of the take profit the main disadvantage (compared with the trailing stop) is that you can go with less profit than what the market is willing to give. What is known as “leaving money on the table.”
Placing a take profit
To place the take profit you must draw targets using technical analysis and according to the time horizon that you are working on, either by the figures and their size as we learned in the module of technical analysis, or using support and resistance lines of the trend, in summary…levels where it is likely a change in trend.
This indicates to us that the profit there is to plan before open the trade. And of course, always take profits, either partial or total.
To measure if your operation would be feasible, taking into account the money management, you can make these measurements with TradingView. By way of example:
1. With the tool “date and price range, we measure the size of the figure. Here we chose the double roof, which as you can see, there was a rebound, so we want to measure up where it could fall.
2. Then we overlay the tool “short position” from our entry up to where I could get the figure to calculate the target. The stop put him above the double roof, because if it breaks that level, it is likely to continue to rise. CLARIFICATION: the values are by way of example, just to show you the tool.
3. We see that it happened what we expected. Even under more the level that we mark. What that would indicate, that the operation took our profit.
4. In the next picture you can where to find these tools. Are the yellow square, marked with a star. To measure the size of a figure, you can either use “date and price range” or “price range”.
This same applies to any figure that we saw in the technical analysis, it is highly recommended that you do tests, both for detecting as to measure them with TradingView. And to this we add the monetary management according to the size of your capital.