The 2 Market Exit Strategy Categories<\/strong><\/h2>\nThere are only two different categories of trade exits strategies. The first one uses a fixed take profit order: when entering a trade, the trader picks price levels for his stop loss and take profit order and then waits until price reaches either one of them. The other trade exit category does not use a fixed take profit order. Instead, the trader trails the stop loss order behind price along the way and only exits when the stop is hit during a retracement. An understanding of both exit strategy categories and when to use them is very important because it allows you to pick the one that suits your trading style and personality.<\/p>\n
The fixed take profit category<\/strong>
\nThis is probably the most commonly used exit strategy. It is ideal for beginning traders, traders who do not always have time to monitor their trades and who have difficulties with the emotional factor. But let\u2019s take a closer look at the pros and cons.<\/p>\nPros:<\/strong>
\n1 – You can determine the reward:risk ratio<\/strong>
\nOnce you set your take profit and stop loss orders, you can easily calculate the reward:risk ratio of your trades. Knowing the reward:risk ratio can be important for numerous reasons and it also helps you stay out of trades that do not have a big enough upside potential.<\/p>\n2 -Limiting emotional decision making<\/strong>
\nTraders who use a fixed take profit order can reduce the impacts of emotional trading mistakes. Once you know the price level where you want to get out, you just wait for price to get there. Greed often makes traders hold trades beyond their initial take profit level because they want more \u2013 usually they have to give back profits for being too greedy. Or, traders who are too fearful sweat every tick and tend to close trades too early ahead of their profit target. A fixed target allows you to walk away after placing your order which can help you reduce emotional mistakes.<\/p>\n3 – Little trade management needed<\/strong>
\nEspecially if you are not a full-time trader, your time is probably limited. Thus, using a fixed take profit order enables you to place your trade, set your orders and then go on with your life. You do not have to worry about what is happening with your trade if you do not watch them.<\/p>\nThe disadvantages of the fixed profit strategy are the advantages of the open-profit strategy and, thus, we will not list them here individually.<\/p>\n
The open (floating) profit category<\/strong>
\nThis strategy is more advanced and it usually requires a bit more experience and a stable character. But once a trader has mastered the emotional aspect of trading, applying the open profit strategy can offer a variety of benefits.<\/p>\nPros:<\/strong>
\n1- You can potentially generate large profits<\/strong>
\nNot using a fixed take profit order and just trailing the stop loss behind current price allows the trader to, potentially, catch large winners. It is impossible to predict how long a trending move will last and not using fixed profit targets enables you to stay in your profitable trades much longer.<\/p>\n2 – Open minded trading<\/strong>
\nTraders who use a hard take profit order act within a fixed and closed mindset. They have precisely defined boundaries for their trades. Traders who do not use a hard take profit order constantly have to evaluate the whole chart to see what is going on. They do not restrict their thinking to the question \u201cCan price make it to my take profit order\u201d, but they have to evaluate whether the overall trend will go on or not.<\/p>\nCons:<\/strong>
\nAt this point we want to highlight the cons of the open take profit system. This method is better suited for advanced traders for a number of reasons and it is essential to understand the downside to avoid problems and mistakes.<\/p>\n1 \u2013 Emotions are an important influencer<\/strong>
\nThe open take profit strategy requires you to constantly trail your stop loss order behind current price. This can become a problem for novice traders who have a hard time dealing with emotions. If you trail your stop too soon and too close to current price, minor price retracements can easily take you out. On the other hand, if you can\u2019t deal with retracements and keep widening your stop during a retracement, you risk giving back profits.
\nThus, the open take profit strategy should be used by emotionally stable traders.<\/p>\n2 \u2013 Time and work required<\/strong>
\nThe other con is the involvement this strategy requires. Depending on your stop-trailing approach you have to regularly monitor your trades and, if needed, adjust your stop loss and trail it behind current price. This can become a problem when you do not have access to your trading platform at all times and, therefore, cannot manage your trades.<\/p>\nSumming it up: Trial and error \u2013 find what works best for you<\/strong>
\nWe do not think that any strategy is superior over the other. Both strategies have their advantages and disadvantages. But it is important to be aware of the different possibilities so that you can make an educated and well informed decision about how to design your trading strategy.<\/p>\n______________________________________________________________________<\/p>\n
Practice Your Trading Strategy With MultiCharts<\/a>. \u00a0Award Winning Trading Platform for Beginners and Advanced Traders.<\/p>\nThere is a substantial risk of loss in futures trading. Past performance is not Indicative of future results.<\/p>\n
The placement of contingent orders by you or broker, or trading advisor, such as a \u201cstop-loss\u201d or \u201cstop-limit\u201d order, will not necessarily limit your losses to the intended amounts, since market conditions may make it impossible to execute such orders<\/p>\n","protected":false},"excerpt":{"rendered":"
Most traders spend all their energy and time trying to find better entry methods or experimenting with indicators that promise a more accurate trade entry signal. Usually these traders experience very inconsistent results and wonder why all their efforts and improved entry systems do not lead to better performance. Trade exits are a very important […]<\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"content-type":"","footnotes":""},"categories":[2,3],"tags":[58,343,344,345,47],"class_list":["post-2580","post","type-post","status-publish","format-standard","hentry","category-online-futures-trading","category-trading-tips-and-strategies","tag-day-trading-2","tag-day-trading-strategies","tag-exit-strategy","tag-market-strategy","tag-technical-analysis"],"yoast_head":"\n
What Market Exit Strategy Should You Use?<\/title>\n<meta name=\"description\" content=\"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"What Market Exit Strategy Should You Use?\" \/>\n<meta property=\"og:description\" content=\"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/\" \/>\n<meta property=\"og:site_name\" content=\"The Trading Blog - Optimus Futures\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/OptimusFutures\" \/>\n<meta property=\"article:published_time\" content=\"2015-10-02T13:11:43+00:00\" \/>\n<meta name=\"author\" content=\"Optimus Futures\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@optimusfutures\" \/>\n<meta name=\"twitter:site\" content=\"@optimusfutures\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Optimus Futures\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/\"},\"author\":{\"name\":\"Optimus Futures\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#\\\/schema\\\/person\\\/79ae52b1d71d688a8ac5ec1b892a4840\"},\"headline\":\"What Market Exit Strategy Should You Use?\",\"datePublished\":\"2015-10-02T13:11:43+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/\"},\"wordCount\":1043,\"publisher\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#organization\"},\"keywords\":[\"day trading\",\"Day Trading Strategies\",\"exit strategy\",\"market strategy\",\"Technical analysis\"],\"articleSection\":[\"Online Futures Trading\",\"Trading Tips and Strategies\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/\",\"url\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/\",\"name\":\"What Market Exit Strategy Should You Use?\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#website\"},\"datePublished\":\"2015-10-02T13:11:43+00:00\",\"description\":\"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.\",\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/what-market-exit-strategy-should-you-use\\\/\"]}]},{\"@type\":\"WebSite\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#website\",\"url\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/\",\"name\":\"The Trading Blog - Optimus Futures\",\"description\":\"\",\"publisher\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/?s={search_term_string}\"},\"query-input\":{\"@type\":\"PropertyValueSpecification\",\"valueRequired\":true,\"valueName\":\"search_term_string\"}}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#organization\",\"name\":\"The Trading Blog - Optimus Futures\",\"url\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#\\\/schema\\\/logo\\\/image\\\/\",\"url\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/wp-content\\\/uploads\\\/2023\\\/07\\\/ab09de32f79993bfecf9b1ab40a32c27f509693d.png\",\"contentUrl\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/wp-content\\\/uploads\\\/2023\\\/07\\\/ab09de32f79993bfecf9b1ab40a32c27f509693d.png\",\"width\":1474,\"height\":331,\"caption\":\"The Trading Blog - Optimus Futures\"},\"image\":{\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#\\\/schema\\\/logo\\\/image\\\/\"},\"sameAs\":[\"https:\\\/\\\/www.facebook.com\\\/OptimusFutures\",\"https:\\\/\\\/x.com\\\/optimusfutures\",\"https:\\\/\\\/www.linkedin.com\\\/company\\\/optimus-trading-group\",\"https:\\\/\\\/www.youtube.com\\\/user\\\/OptimusTradingGroup\"]},{\"@type\":\"Person\",\"@id\":\"https:\\\/\\\/optimusfutures.com\\\/blog\\\/#\\\/schema\\\/person\\\/79ae52b1d71d688a8ac5ec1b892a4840\",\"name\":\"Optimus Futures\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/?s=96&d=mm&r=g\",\"url\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/?s=96&d=mm&r=g\",\"contentUrl\":\"https:\\\/\\\/secure.gravatar.com\\\/avatar\\\/?s=96&d=mm&r=g\",\"caption\":\"Optimus Futures\"}}]}<\/script>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"What Market Exit Strategy Should You Use?","description":"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/","og_locale":"en_US","og_type":"article","og_title":"What Market Exit Strategy Should You Use?","og_description":"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.","og_url":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/","og_site_name":"The Trading Blog - Optimus Futures","article_publisher":"https:\/\/www.facebook.com\/OptimusFutures","article_published_time":"2015-10-02T13:11:43+00:00","author":"Optimus Futures","twitter_card":"summary_large_image","twitter_creator":"@optimusfutures","twitter_site":"@optimusfutures","twitter_misc":{"Written by":"Optimus Futures","Est. reading time":"5 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/#article","isPartOf":{"@id":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/"},"author":{"name":"Optimus Futures","@id":"https:\/\/optimusfutures.com\/blog\/#\/schema\/person\/79ae52b1d71d688a8ac5ec1b892a4840"},"headline":"What Market Exit Strategy Should You Use?","datePublished":"2015-10-02T13:11:43+00:00","mainEntityOfPage":{"@id":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/"},"wordCount":1043,"publisher":{"@id":"https:\/\/optimusfutures.com\/blog\/#organization"},"keywords":["day trading","Day Trading Strategies","exit strategy","market strategy","Technical analysis"],"articleSection":["Online Futures Trading","Trading Tips and Strategies"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/","url":"https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/","name":"What Market Exit Strategy Should You Use?","isPartOf":{"@id":"https:\/\/optimusfutures.com\/blog\/#website"},"datePublished":"2015-10-02T13:11:43+00:00","description":"Exist Strategy could be a determining factor of profitability. Some traders put emphasis on Exit Strategy, because it maybe important than entry. Read why.","inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/optimusfutures.com\/blog\/what-market-exit-strategy-should-you-use\/"]}]},{"@type":"WebSite","@id":"https:\/\/optimusfutures.com\/blog\/#website","url":"https:\/\/optimusfutures.com\/blog\/","name":"The Trading Blog - Optimus Futures","description":"","publisher":{"@id":"https:\/\/optimusfutures.com\/blog\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/optimusfutures.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/optimusfutures.com\/blog\/#organization","name":"The Trading Blog - Optimus Futures","url":"https:\/\/optimusfutures.com\/blog\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/optimusfutures.com\/blog\/#\/schema\/logo\/image\/","url":"https:\/\/optimusfutures.com\/blog\/wp-content\/uploads\/2023\/07\/ab09de32f79993bfecf9b1ab40a32c27f509693d.png","contentUrl":"https:\/\/optimusfutures.com\/blog\/wp-content\/uploads\/2023\/07\/ab09de32f79993bfecf9b1ab40a32c27f509693d.png","width":1474,"height":331,"caption":"The Trading Blog - Optimus Futures"},"image":{"@id":"https:\/\/optimusfutures.com\/blog\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.facebook.com\/OptimusFutures","https:\/\/x.com\/optimusfutures","https:\/\/www.linkedin.com\/company\/optimus-trading-group","https:\/\/www.youtube.com\/user\/OptimusTradingGroup"]},{"@type":"Person","@id":"https:\/\/optimusfutures.com\/blog\/#\/schema\/person\/79ae52b1d71d688a8ac5ec1b892a4840","name":"Optimus Futures","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/?s=96&d=mm&r=g","caption":"Optimus Futures"}}]}},"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"Optimus Futures","author_link":"https:\/\/optimusfutures.com\/blog\/author\/optimus-futures\/"},"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/posts\/2580","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/comments?post=2580"}],"version-history":[{"count":0,"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/posts\/2580\/revisions"}],"wp:attachment":[{"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/media?parent=2580"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/categories?post=2580"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/optimusfutures.com\/blog\/wp-json\/wp\/v2\/tags?post=2580"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}