Scaling out of a position

[Jaxettew 0]

When I am in a trade, I find myself constantly watching my P/L instead of seeing what the trade is doing, which is terrible.  I am thinking about getting rid of my P/L so it doesn't pop up while I am in a trade.  How do you guys scale out of a trade?  Do you start taking profits at a certain percentage? Certain Prices? Certain levels?

Thanks!

[Justin 264]

Andrew and lots of other traders here partial out substantially at 10% as they go. Usually starting around 1R.

Personally I like to wait until 2R take 50% off, set my stop loss to break even and then partial 10-20% from there.

Definitely look to doing some sort of scale out at a xR, but don't forget about your levels as they can give good indication of resistance and support.

As Andrew always says "These levels are magic!"

[Jaxettew 0]

Sounds like such a noob (Which I am), but what does 1R, 2R etc?

[DDykstra1966 0]

Same here Justin.   I scale out of a winning trade at around 2R, then watch and see what happens after that.  If I remember I'll move my stop to break even, as you hate to give back any losses after the first 50%.   

 

[DDykstra1966 0]

Jax, R = Risk. 

If I'm, risking $1.00 on a trade (entry point vs. stop loss) my target exit point should be $2 - $3 above entry point. 

e.g. if I enter long at $50, and my stop is at $49, I have $1 risk.   Should target $52 - $53 for a healthy Risk/Reward.  Need to see a resistance level or moving average in the $52/$53 range.

Generally I'll target 2 - 3R before I'll take a trade.

Cheers. 

Dale

[Brendon 146]

On 2/3/2020 at 12:02 PM, Jaxettew said:

When I am in a trade, I find myself constantly watching my P/L instead of seeing what the trade is doing, which is terrible.  I am thinking about getting rid of my P/L so it doesn't pop up while I am in a trade.  How do you guys scale out of a trade?  Do you start taking profits at a certain percentage? Certain Prices? Certain levels?

Thanks!

Yup, you have to partial out, i use 1/3 and usually take 3 partials before im fully out. As to when, it depends on how the stock is behaving and if levels were tested. But more importantly is to move your stop to b/e after your first partial, you never want a winner to turn into a loser.