Position Management

Pre-Entry Management

Prior to entry, we record our desired Entry Price and Initial Stop price. So on April 15, we would have written down:

• Entry price: If price exceeds $153.30 (Highest High V), we open position.
• Initial Stop at $144.54 (Bottom of V)

Then on April 16,

• If price is more than $153.30, we Enter the position
• If price is less than $153.30, we do not Enter the position.

If we do not enter a position, don’t fret! There will always be another chance to trade. Do not chase the trade. Let the trade come to you.

Open Position Management

There must be an exit plan in place before any entry is made. We should write down our exit rules in black and white before we open a trade. Once we are in a trade, we should just stick to the pre-existing exit plan. We should not change our exit rules while we are in a trade!

Sometimes, when a trade is going a trader’s way, the traders sees the big money that he has and he losses heart: He may want to realize his profits at that point. This can be a big mistake as there may be more profits if he just keeps to his exit plan!

When we trade, we want to be as emotion – free as possible. Having a written exit plan will keep us objective during the trade. If we wish to change our exit plan, we can. However, we can only do this before we enter any trade. We do not change plans halfway! So the sequence is:
• In a trade … stick to Exit Plan A.
• Once the trade finishes, edit Exit Plan A.
• New Exit Plan B is created.
• Enter new trade B. Exit Plan B is in place.
• In trade B … stick to Exit Plan B to completion

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