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Trading the Measured Move: A Path to Trading Success in a World of Algos and High Frequency Trading by David Halsey

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CHAPTER 13

How to Manage Positions and Take Profits

Taking profit and managing a position are the two most important skills to be learned as a trader. There are a million ways to get into a trade. A systematic strategy for taking profit is in many ways much more important than an entry strategy. Sometimes the range in the market is very large. This large range means that the targets for normal measured moves (MMs) will be extremely large. The range is so large that it requires a trader to hold a position overnight. Newer traders who can't afford the overnight margin want to take smaller trades during the day. They also might not want to expose themselves to overnight volatility while they are asleep. The benefit of taking smaller profit targets inside of a larger MM is that a trader can be flat and have no risk at the end of the day. There are four ways to take profits inside of series of MMs.

The Rule for Measured Moves

There is a very simple rule for trading MMs. Each and every MM has its own unique entry and target: take profit on the time frame you entered the trade on.

All traders fall victim to fear and greed. Our systematic entry strategies help us keep fear in check. Taking profit at each MM's own unique target helps keep a trader from being a victim of greed. As you have witnessed, the –23 percent profit target is the exact reversal point at which a market turns. There are four ways to take profits inside a series of measured moves.

1. The distance formula
2. Trailing ...

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