Tuesday, January 22, 2008

What is more important in day trading, Entering or exiting a position?

According to my trading plan I don’t enter a trade until I found a candlestick which is short or narrow enough to give me the risk I am willing to take ,what does it mean? It means I only enter a trade when I found an excepted risk: reward ratio. Now the problem anyone can face is you can know your risk easily (could be predetermined) but reward, how do you know, what is the reward, before closing the position. What I do? I look at the next round number, support line, resistance line to find my exit point. I also exit a position if it drop below 5EMA,but it is not possible to before hand.So exiting a trade is not less important then entering or vice versa.

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