How to take profit?

Discussions about Money Management and Risk Control.
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oem7110
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How to take profit?

Post by oem7110 » Tue Aug 02, 2011 7:57 pm

For following the trend, Nobody know when to sell at the top until market turns down first. Some people will sell 50% first without confirming whether the trend keeps going or not.
Does anyone have any suggestions on how to manage the profit? in order to ensure to make a nice turn at the top.

Thanks in advance for any suggestions

"A bend in the road is not the end of the road... unless you fail to make the turn."

sluggo
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Post by sluggo » Tue Aug 02, 2011 8:30 pm

Have you seen the large numbers of posted messages here which cover this very topic? Maybe you would benefit from doing a dozen Search operations (top center of the page you're reading now).

You could start with the search shown below. Then use your creativity, imagination, and cleverness to invent eleven other Search operations. Run all eleven of them. Read the messages and learn.
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laurens3
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Post by laurens3 » Tue Aug 02, 2011 11:57 pm

I also think it is important that you decide for yourself what kind of profit taking strategy you are comfortable with and that suits your personality.

If you do not like to give a big part of the profits back then get out sooner but this will limit you to get that one trend that will make your year.

If you are comfortable giving back open profits and don't care that much of higher drawdowns then let it just run all the way and trail a wider stop.

It all depends on your beliefs and what you are comfortable with. With fast profit taking or letting your profits run to the moon, either way is good, when the strategy conceptually is correct then it will generate profits.

Laurens

oem7110
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Post by oem7110 » Wed Aug 03, 2011 1:45 am

laurens3 wrote:
...

If you are comfortable giving back open profits and don't care that much of higher drawdowns then let it just run all the way and trail a wider stop.
..
Laurens
I care about higher drawdowns taking back all my profit and only feel comfortable giving back 20% of open profits, does it make any sense in money management?
Does anyone have any suggestions
Thanks everyone very much for any suggestions

babelproofreader
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Post by babelproofreader » Wed Aug 03, 2011 10:18 am

Before considering a "take profits" approach it is necessary to try to determine what type of market you are in. If the market is trending, an arbitrary "take profit" level will undoubtedly leave money on the table by getting out too soon. On the other hand, if the market is ranging a "take profit" level at the extremes of the range will help to avoid giving money back as the market retraces back into the range. In my opinion it is necessary to have a coherent method for determining market type before attempting to "take profits."

oem7110
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Post by oem7110 » Wed Aug 03, 2011 10:28 am

babelproofreader wrote:Before considering a "take profits" approach it is necessary to try to determine what type of market you are in. If the market is trending, an arbitrary "take profit" level will undoubtedly leave money on the table by getting out too soon. On the other hand, if the market is ranging a "take profit" level at the extremes of the range will help to avoid giving money back as the market retraces back into the range. In my opinion it is necessary to have a coherent method for determining market type before attempting to "take profits."
I know how to determine whether current situation is trend or range market, but I don't know on how to handle the trend situation in term of money management.
Do you have any suggestions on making a nice turn at the top.

Thanks in advance for any suggestions

"A bend in the road is not the end of the road... unless you fail to make the turn."

babelproofreader
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Post by babelproofreader » Thu Aug 04, 2011 6:53 am

If you can identify when a market is trending and not ranging why would you want to take profits in a trending market? Why not just follow the trend with some form of trailing stop? The exception to this general approach might be if you can identify in advance when a trend will end, and if you can do this the methodology you use will suggest a time and level to take profits.

So the question becomes "Do I know, in advance, when a trending market becomes a ranging market or when a trend reverses direction?" If you know this, you know when to take profits.

oem7110
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Post by oem7110 » Thu Aug 04, 2011 12:12 pm

babelproofreader wrote:If you can identify when a market is trending and not ranging why would you want to take profits in a trending market? Why not just follow the trend with some form of trailing stop? The exception to this general approach might be if you can identify in advance when a trend will end, and if you can do this the methodology you use will suggest a time and level to take profits.

So the question becomes "Do I know, in advance, when a trending market becomes a ranging market or when a trend reverses direction?" If you know this, you know when to take profits.
I only know whether the market is trending or ranging at this moment, not in advance. My issue is how to handle the change in trend nicely, and prevent taking profit too early in the middle of the trend. If you use trailing stop, do you exit all positions at once? what do you do if market go back up again?
How to handle the change in trend nicely is my question.
Does anyone have any suggestions?
Thanks in advance for any suggestions

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