Day 10 – Advanced Trade Management & Exit Strategy



Introduction

Most beginners spend all their time asking:

“When should I buy?”

Professional traders ask:

“When should I sell?”

The truth is, how you exit can make more difference to your account than how you enter.
Good exits protect profits, avoid emotional panic, and let winners run longer than losers.

Step 1: The 3 Types of Exit Strategies

1. Target-Based Exit

  • Set a predetermined profit target based on risk-reward.

  • Most common is 2:1 (reward twice the risk).

Example:
If risk is ₹10 per share, target is ₹20 profit per share.

Advantages:

  • Removes emotion.

  • Easy to plan.

Disadvantage:

  • May cut a trade too early in big trends.

2. Trailing Stop Exit

  • Stop-loss moves in the direction of the trade as price moves.

  • Locks profits but allows trend to continue.

Example:
Stock bought at ₹100 with SL ₹95.
Price moves to ₹110 → SL moves to ₹105.
Price moves to ₹120 → SL moves to ₹115.

Advantages:

  • Captures large moves.

  • Protects gains automatically.

Disadvantage:

  • Can get stopped out during minor pullbacks.

3. Time-Based Exit

  • Exit at a specific time regardless of price.

  • Often used in intraday trading.

Example:
Intraday trader exits all positions by 3:15 PM to avoid overnight risk.

Advantages:

  • Removes overnight gap risk.

  • Keeps trading disciplined.

Disadvantage:

  • May exit too early before a move completes.

Step 2: Combining Exit Strategies

A pro trader often combines them:

Example Plan:

  • Take 50% profit at first target.

  • Trail stop for the rest.

  • Exit all by a set time if target not reached.

This gives both safety and upside potential.

Step 3: Exit Signals from the Chart

1. Support & Resistance Flip

If price breaks below recent support (in longs) or above resistance (in shorts), consider exiting.

2. Trendline Break

When price breaks the main trendline, momentum may be fading.

3. Candlestick Reversal Patterns

Strong reversal patterns like Shooting Star, Bearish Engulfing, or Doji after a long rally are warning signs.

Step 4: Managing Losing Trades

Cut Losses Early

Never hold a trade hoping it will “come back.”
If your stop-loss is hit — exit, no questions asked.

Avoid Averaging Down

Adding to losers is gambling, not trading.
If you want a bigger position, add to winners only.

Step 5: Scaling Out of Profitable Trades

Scaling Out Plan Example:

  1. Exit 50% at Target 1 (2:1 R:R).

  2. Move SL to breakeven.

  3. Let rest ride until trend break or trailing stop hit.

This gives you cash in the pocket while still giving the trade room to grow.

Step 6: Exit Planning Before Entry

The best time to plan your exit is before you even enter the trade.

Example Trade Plan Before Entry:

  • Entry: ₹200

  • Stop-Loss: ₹190

  • Target 1: ₹220 (50% exit)

  • Target 2: ₹240 (rest exit or trail)

Now, when in the trade, you don’t have to think — you just follow the plan.

Step 7: Day 10 Practice Plan

  1. Take trades from Days 8 & 9 watchlist.

  2. For each, plan two targets and a trailing stop.

  3. Simulate what would happen if price hit either.

  4. Write in your trade journal: “Did my exit protect capital and maximize gains?”

Step 8: Common Day 10 Mistakes to Avoid

  • Moving targets during trade based on greed.

  • Removing stop-loss because you “think” it will reverse.

  • Closing too early just because of fear.

Pro Tip:

A trader is paid for patience.
If you’ve planned a good exit strategy — trust it.
Don’t micro-manage every tick.

End of Day 10 Summary

Today you learned how to:

  • Set fixed and trailing exits.

  • Combine multiple exit methods.

  • Protect winners and kill losers fast.

At this stage, you can:

  1. Find setups (Day 8)

  2. Enter with precision (Day 9)

  3. Exit like a professional (Day 10)

Tomorrow, in Day 11, we move into Risk Management Psychology — the mental shield that stops fear and greed from destroying your trades.

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