Where to Take Profit When Day Trading (Exit Strategy)

Profit trading strategy

Profit trading strategy

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There are also a number of other trade plan metrics that are useful for other purposes, such as fine tuning risk per trade, but the metrics presented here will at least ensure that the plan has the potential to be profitable in the long run.

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Pair trading (spread trading) is the simultaneous buying and selling of two financial instruments which relate to each other. The difference of the price changes of these two instruments makes the trading profit or loss.   Spread trading can be of two types:

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Both of these trade plans had profit factors greater than , and therefore were profitable. All else being equal, the higher the profit factor the more profitable the trade plan. Another important performance metric that makes use of the win rate, loss rate, average gain, and average loss is statistical trading expectancy.

During any type of trend, traders should develop a specific strategy. The buying strategy is preferable when the market goes up and equally the selling strategy would possibly be profitable when the market goes down. But when the market moves sideways the third option – to stay aside will be the cleverest decision.    

Decoding the most common terms used in forex will speed up traders understanding of the world of currencies: Currency Nicknames:

This is the five minute chart of AliBaba for December 76, 7568. The volume indicator is at the bottom of the chart. The trading day starts with a relatively big bullish gap. The trading volumes are high and volatility is high, as well. This is the morning craziness.

A system with a high winning rate can still be a losing system if the average loss is much greater than the average win. This important detail is often left out by promoters of high win-rate trade systems.

The distance between the entry point and the stop loss order is $. The price decrease continues throughout the day. We manage to follow the gradual price drop by a trend line (blue). Since we have a trend line, we can hold the trade as long as the price is below that line or until the end of the trading session. The end of the day is what comes first and we close the trade in order to keep it intraday.

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Hedging is commonly understood as a strategy which protects investors from incidence which can cause certain losses. The idea behind currency hedging is to buy a currency and sell another in the confidence that the losses on one trade will be offset by the profits made on another trade. This strategy works most proficiently when the currencies are negatively correlated.    

Day trading is a trading style that involves opening and closing your trades intraday through margin accounts, which means you borrow extra funds from your day trading broker to trade with larger amounts of money.

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