Profit-taking order, i.e. how and where to take take profit. Part 1

Placement of take profit orders and exit transactions are usually very low on the trader's priority list. Usually, what we focus our attention on is finding a good point to enter the transaction as well good placement of stop loss orders. This is a very big mistake, because a well-placed profit order combined with good hedging of the position is as important as the moment it starts. This subject also seems to me very interesting, because personally I am not infallible in this matter and from time to time I set the security too quickly, or simply in the wrong place - the one who follows strategy test "On account of the day" knows what I'm talking about☺.

First, let's look at the most common mistakes when exiting transactions and taking profits before moving on to specific tools and techniques to help you determine your goal. The following errors make up the majority of exit problems, and avoiding them, most traders will likely notice significant progress in their trading.

# 1. Amount as an indicator of leaving the position

One of the main mistakes in placing take profit orders is choosing a place to exit based on the amount you want to earn, not based on the context of the chart. Always, but always choose a price level that makes sense in the overall context of your transaction and the value you are trading on. You must remember that the market does not care about our orders and we must always make sure that the price can reach them.

# 2. Take profit not achieved - now what?

It often happens that the price goes in the direction assumed by the trader, and then changes it only a few points before the actual order of profit taking. What should you do in this scenario? Generally, there is no one good answer here. Sometimes it is more profitable to leave this position and not hope for another rally towards the target level. The price is moving, and our orders are irrelevant to the market. If this situation occurs and the main goal for take profit is omitted, it is sometimes better to exit the transaction and take what the market gave. The second option is to leave the position and wait for the target level to be met, but in this case, remember to never let a profitable position change into a lossy position only because of the "beliefs" we have set ourselves on the market.

# 3. Loss rejection

Always focus on the potential loss first. The sequence during the transaction should always look the same:

• make sure you see a good signal to enter (do not open the position yet),
• specify a reasonable level of stop loss and take profit (do not open a position yet),
• if profit / risk ratio is sufficient, then you can open a position. If not, we skip this transaction - we never move SL and TP to create an artificial, high R: R ratio.

# 4. Probability

Another basic rule: you can't calculate the probability that a transaction will be profitable when entering into it. Profits cannot be predicted regardless of where the destination is. Profits are always there potentially and it's important to focus on risk first because it's the only thing you can really control.

# 5. Objectivism

Seemingly trivial, but it is very important to determine stop loss and level target take profit before entering into transactions. Once the position is in the game, we cannot make a decision objectively, because we are affected by emotions associated with price fluctuations.

Great advice is:

"Determine when to exit, when to make a profit, set the order ... and turn off the computer."

In the second part we will present specific methods for making profits as well as tools and indicators that help you set a goal for transactions and thus for the target level of take profit.