When you are doing a trade the question quickly comes out :  How and when do you leave without losing a cent ?   Aiming targets has to be one of the most important elements of your  trading strategy , and this is the subject of the next article in our series Technical Analysis Explained.

Objects can be found on time (I’ll keep doing the trade for three weeks ) or based on technically (I’ll stay in the trade until my slow moving average passes over my faster moving average)  or  profit-based (I’ll quit when I make the profit of 1000usd   ), or based on price (I’ll stop of the trade when it reaches my target price .)

Of the 3 methods each of them has some advantages and liabilities .  Technical exits are always available and remove this part of private judgment , however work well only in effective trends , cause deficit by congestion , and nearly always leave a number of money upon the table .  Found on time tools are helpful at times but just as often are net losers , and so shouldn’t be seriously taken as a solo tool .   Based on profit exits can train a trader to make frequent earnings but what happens when the trade continues far over your pre-planned exit point ?  This violates the simplest rule of trading: run after you win .

The best means of exiting is to decide aimed prices but only when these are heavily 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 your target is going to be sound and the chances of yours of remove everything that the markets has is much more higher then with arbitrarily chosen, fixed-dollar profit targets (which attend to be emotionally driven )  or a technical moving average tool (which by definition is compelled to leave much money on the table ).

How do you aim profit targets according to market structure instead of an arbitrary dollar objectives?  For somebody it is not an easy question however for the trader who has created the understanding of multiple time period structure and the ability to project the support now and resistance levels forward into the future , directing targets is not hard to do . The basic skill is to {use your higher time-period support} and resistance levels ( this should commonly be one time-period higher than your trading time-period), and to set your target at the next logical support or resistance level beyond the current price.

Technical analysis explained as follows: Suppose you are day-trading the S&P E-mini contract.  You’re using a 5 minutes chart and take a position using your best entry tool . The market begins to move in your favor and enhance you have 5 contracts to put on a position you quickly accumulate a profit of 750usd.  You are glad and feel a bit greedy and that makes you want to get profits quickly , especially as you notice a slight retracement in the five minutes chart. But, well known the market structure is all the time at play, you step back for a moment and view 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 bottom of the daily envelope and close to the weekly envelope bottom too.  You can see that the logical target of this initial move is at the daily PLDot some 9 full points away, and that the improvement of the 5 minutes bar with its slight retracement is entirely normal and go on with the thought that the market has {further upside}. You set a price objective at the daily resistance and set an alert to sound when it is full filled , so that you are able to take profits here .  You can then further assess if the market will reverse and step back to the beginning support level or pause and keep going to higher level of resistance.

One of the main points is that when watching market structure as opposed to arbitrary dollar value price objectives you always control what the market is doing . As a technical analysis explained course teaches, full control taken by you enhance you know the structural aim at all times as the market moves between its higher time- period support and resistance levels.

So you are starting out in trading and you have developed your stock trading strategy . You have gone through technical analysis training course and and for your preferred style you have gone with trend traing after some time in thought.

Trend trading is an attractive strategy for sure . Look at a stock chart retrospectively and the trending patterns jump out at you . You get excited about catching a trend in the beginning and riding it through to its final conclusion many months down the road . The money beckons and sucess is before you !

Unforunately, in reality, trading isn’t that easy. You enter a trend – you get in near the beginning or a bit late, but you do make it on board . Now that you are in the trade you move into a small profit as your predictions start to come true . Then a strong day comes along and after that then the market stops dead in its tracks as the stock hits resistance . You tell yourself there will be more and you couldn’t move everything in a day anyway and so you add to your position . But alas the following day the market opens up , goes absolutely nowhere, and then it starts heading down fast. Since you’ve added to the position you were in you head back to break even fast and then you take a loss by the time you get your orders in place . What happened ? How could you have know beforehand that the trend wouldn’t go on and that you should have taken the profit when the market started strong and then paused ?

The following are a few tips for trading that will let you know when a trend is going to go on and when it’s going to stop . If you apply these to your technical analysis training you will be well ahead of the game .

First of all : go with higher time period charge when setting targets; look for logical areas of resistance and support to figure out where the market is going to stop or start moving .

If you do not know how to predict where future areas of support and resistance exist , or within your trading are unsure of how to coordinate your time frames , then take a quality technical analysis training for some help . Drummond Geometry is one of the best but a variety of valid schools of thought exist .

Another element that is needed is a tool that will help you judget robustness and trend strenght. Resistance or support will be broken through by a strong trend and when a point or resistance or support is hit by a weak trend it will go into congestion or stop or it will reverse and move in the opposite direction . If you have the right tool in your analysis tool kit you’ll be able to figure out which action is more probable ; if you do not have the tools then you have to wait and see , and the possibility of being disappointed is high .

To appropriately measure, momentum tools should be used and apply them to a timeframe that is smaller than the one you are trading … basically if the daily chart is what you’re trading , with your trades try to pick the day’s high or low, then you would be looking at an hourly or half-hour chart to give you support in your trading decisions intraday .

We’ll talk about this more in part 2 of the technical analysis training series.