To seize the opportunity of closing positions is actually to choose a closing method that suits you.
1. The way of closing positions should suit your personality
What kind of person you If you are doing short-term intraday trading, your closing method should not have the option of holding the position overnight. No matter the market happens to make a large profit in your direction, you should also close the position, because the subsequent market has nothing to do with you. Time is also the best opportunity to close positions in this system.
And if you are a slow person, can endure loneliness, and like traders who hold for a long time, then this kind of liquidation will be your worst liquidation, even if it is proved to be the best opportunity in the future. There is also something wrong with your system. For this long-term trading method, you should choose a long-term trend tracking as a trailing stop loss.
Therefore, before trading, you should first consider your best closing point, which should fit your own trading system.
2. The market determines your best closing point
Taking shocks as an example, shocks include box shocks, triangle convergence, diffusion, flag shapes, etc. Some traders will enter the market on the edge of the box shock, so his best exit plan is to exit on the other edge; if If he uses trailing stop loss at will, he is likely to turn back after stopping the loss, because the trend in the shock is relatively random.
For the trend market, at least it can be divided into two types, one is the trend with volatility, the other is the smooth trend with little callback, and the other is the rapid trend.
These two trends also have different best exits. The volatility trend is a kind of callback that occurs soon after a breakthrough. The channel trend is a special case of this trend. At this time, the best way is to exit the market after breaking through the previous high or previous low.
For a stable and smooth trend, although it is relatively rare, as long as it occurs, there will basically not be a large correction. At this time, you can enter the market by breaking a certain moving average or breaking the high and low points of the previous K line.
The rapid trend is manifested as a very long K-line with a large entity. For novices, they will think it is a breakthrough in heavy volume, and then chase it. This is the beginning of the tragedy, and often this kind of chasing ups and downs will trap you at the highest point or the lowest point. The best exit plan for a rapid trend is to enter the market as soon as you see it. In many cases, there will be a big reverse K-line.
3. Closing a position is not just about profit
Many people think that closing a position is an order to close a profit. In fact, there is an order to close a loss, but they are used to calling it a stop loss, which is also true. For many traders, the stop loss is static, and only when there is a lot of profit will it be moved to Pingbao or lock in a part of the profit. And the flat loss I mentioned is to actively stop the loss, which can keep the loss very small, and of course part of the market will be lost. From the perspective of loss, if the loss can be kept down every time, then I personally think that this liquidation is also the best liquidation.
In the trading world, the reason why many people continue to lose money is not because they can't make money. As long as they do it for a long time, there will always be times when they will make a lot of money. The real reason for losing money is that every time you make money, you lose it back at a faster rate. But if there is one of your closing methods that can reduce losses, you will have a big advantage.
Therefore, different market conditions will have different best closing opportunities. It must be nonsense to say that you can get it every time. The key to the method of closing positions is to fit your own system, there is no best but the most suitable one. When you have determined a certain exit plan, you have actually determined a certain market that suits you, and your goal is to capture that part of the market, and at the same time, adopt an active liquidation strategy to reduce losses at unfavorable times.
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