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Stock Trading Course And Profit Targets Setting By 3 Different Methods

Once you are doing a trade the question quickly rears its head :  How and when do you pull out of the trade at a profit ?   Directing targets has to be a very important element of your  trading strategy , and this is the subject of the next article in our series Stock Trading Course.

Objectives can be time-based (I’ll stay in the trade for 3-week) or found on technically (I’ll keep making the trade until my slow moving average crosses over my faster moving average)  or  profit-based (I’ll quit when I make the open profit of $1000 ), or found on price (I’ll stop of the trade when it get to my target price.)

Of the three methods each of them has some advantages and liabilities .  Technical exits are always available and remove this part of personal opinion  , but act well only in effective trends , cause losses in congestion , and nearly always leave a number of money on the table .  Found on time tools are helpful at times but just as always are net losers , and so cannot be seriously taken as a single implement.   Found on profit exits can teach a trader to take frequent profits but what happens when the trade continues far beyond your pre-determined exit point ?  This violates the easiest rule of trading: let your winners run .

The best means of exiting is to decide aimed prices but only when these are soundly based in the market structure and point the market’s existing support and {resistance matrix}.  If your trade plan {takes into account} the natural support and opposition of the market then the target of yours will be sound and the opportunities of yours of taking out all that the market offers is even more higher then with arbitrarily chosen, arranged dollar profit aims (which attend to be emotionally driven )  or a technical moving average tool (which by definition is obliged  to leave a number of money upon the desk).

How will you set profit targets according to market structure instead of an arbitrary dollar objectives?  For some of us this is not an easy question however for the trader who has developed an understanding of multiple time period structure and the ability to project the support now and resistance levels forward in the coming days, setting targets is easily finished . The basic technique is to {use your higher time-period support} and resistance levels ( it should normally be one time-period higher than your trading time-period), and to set your target at the coming logical assist or resistance level beyond the current price.

Stock trading course as follows: If you are day-trading the S&P E-mini contract.  You’re using a 5 minutes chart and take a position using your favorite entry system . The market starts to move in your favor and because you have put on a position with five contracts you quickly accumulate a profit of $750 .  You are pleased and turn a bit greedy and that makes you want to grab profits fast , especially as you see a slight retracement in thefive-minute chart. But, understanding that market structure is often at play, you step backward for a period and take a look at  the everyday and weekly charts. On your Drummond Geometry charts you can quickly see that your entry was close to everyday and weekly support , at the last of the daily envelope and close to the weekly envelope bottom as well .  You can see that the logical target of this initial move is at the daily PLDot some 9 full points away, and that the development of the five-minute bar with its slight retracement is totally normal and consistent with the thought that the market has {further upside}. You made a price target at the daily resistance and set an alert to sound when that is full filled, so that you can make money there .  You can then further assess if the market will reverse and move back to the beginning assist level or stop and continue to higher level of resistance.

The important thing is that when watching market structure as opposed to arbitrary dollar value price objectives you mostly control what the market is doing . As a stock trading course teaches, you are in full control because you know the structural target mostly as the market flows between its higher time- period support and resistance levels.

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