When Do you Cut a Trade

I have long believed that an important part of trading is the exit. It's the exit that determines whether you close the position at a loss or a profit and how much of a profit.

You put the trade on and manage it. But how?

The obvious exits are when the momentum and order flow result in a complete reversal. You don't need to work that one out. You're the first to know. But what about a trade like the Gap Fill trade today on the ES? I was a bit early on the entry at Trade 1 and cut it at the 33EMA. The 6CCI told me that there would be a pullback and I took the hint.

Trade 2 was a better entry because the CVD was red. I still wasn't too happy with the 45CCI running horizontal positive but took the trade because I saw 2 points for my first scale. Scale I did. I cut the balance at the first green VB as it looked like "they" had decided that close enough was good enough and the risk/reward had now changed. The ES had been grinding higher all the London morning and although I expected that to continue to test the area just above 1100.00 I also believed that the Gap Trade would be in play and hoped it would bring in enough day trade profit takers to make a good profit.

After that trade, i couldn't go long until the resistance issue was resolved so I waited, and waited and waited. The sun was shining in London and I was looking out the window at the trees in the park opposite my house.

Patience, patience and then there was the divergence trade - Trade 3. By now, the CVD was useless because of all the sideways action but the nice peak in the 6CCI and a rejection of resistance above with the red VB put me into the trade. This was all in and all out at a couple of ticks above yesterday's high. It seemed that everyone was watching the same movie so I had to pay up 2 ticks to exit and finish the day. The Footprint Volume Profile paid for itself today.

I have been reading some of the stuff that the "gurus" are writing and it seems that their selling point is to help their customers make 4 ES points a day. In today's market that is not a big ask. The problem is those darn losing trades that get in the way. I asked Kiki whether she thought that 4 points was hard. Her answer was very interesting. She said "all you have to do is tighten up a bit and only take the trades when EVERYTHING lines up, take your 2 points and run. Then do it again during the day." This is the focus of Kiki's FloBot - the surest trades.  We've got two years of data on several different markets and there is alot of testing going on, so FloBot update at a later time

This all goes to reinforce my battle cry for CP traders in the making: Trade 1 market from one chart using only 1 setup.

Trade well everyone. Making money is the best revenge.