4 Ways to Action a trade
You know that successful trading is…
Patience. You need to wait for the setup, reason, system, lining etc…
But then there is the 2% time where you actually ACTION a trade.
We action a trade for three reasons.
To get out
But we need to talk about these reasons more…
Let’s do it.,
ACTION #1: Trade lines up – JUST TAKE THE TRADE!
When your trading signal lines up with your entry, stop loss, take profit, and system:
This is the most obvious time to take action.
It tells you “HELLO AN OPPORTUNITY HS ARISEN”
It is crucial to act quickly and decisively when this happens, as opportunities in the market can disappear just as quickly as they appear.
ACTION #2: Adjust your levels – JUST CHANGE THE TRADE
There are two levels you can adjust with your trades. Stop loss and Take profit.
When the market is moving in your favour, and you have solid rules to move your stop loss in the favour. This is done to lock in minimum gains.
For example. When my trade is 1:1 in the money, I might move my stop loss to just above breakeven. This way I have nothing to lose if it turns against me.
Then when the market is shooting in your favour, you might want to adjust the take profit.
This is because you can see the market wants to move further or…
There is a new setup with a new take profit level in place – which happens often with my analyses.
Action #3: Execute the time stop loss – JUST GET OUT
When an extended period has taken place i.e. 35 days or 7 weeks.
You might want to just get out of the boring trade.
You are either :
• Chowing (eating away at) unnecessary daily costs holding a non performing trade.
• A trade setup seems null and void as a new contrary setup as formed.
• Or it’s just a plain old opportunity cost where you can put your money in better places.
it may be necessary to exit the trade in order to avoid incurring too much in daily fees or missing out on other better opportunities.
Action #4: Exit due to unforeseen circumstances- SERIOUSLY JUST GET OUT!
For example when a black swan event occurs:
A black swan event is a term used to describe a market collapse (10X the standard deviationof its normal price move) that is unexpected and has a significant impact on the market.
In the event of a black swan event, it is essential to exit your trade in order to protect your capital and avoid taking a bigger loss than you expected.
Can you think of another time to action a trade in the financial markets?
Let me know in the comments.
Trade well, live free.
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