TRADE MANAGEMENT

There are many different fazes a trader must go through to be consistently profitable. One of the last stages/goals a professional trader has to accomplish is trade management. This could means different things for different traders depending on your on personal development and the rules and guide lines of your trading plan. The reason I bring this topic up is,(as was stated in previous post) we are seeing the market sentiment change as selling pressure starts to take stronger hold on intra-day price action. Trade management will determine a traders losses/ profitability. Market environment can change very rapid were one week holding on to winning trade is easy because all the sign line up perfectly. Then there are times were it is a struggle to get a position started. At this stage I believe is were the trader starts to determine that trading is more of an art than a science.

Trade management is being able to carter your idea to the changing market environment to help limit risk and maximize the profit potential. This can be done in many different ways, the two main ways (which are taught by Keystone) are share size and trade expectation. Being able to read the current market environment and adjust your share size accordingly will give you better chance to take advantage of trade opportunities with increased volatility. Adjusting share size(typically lower with higher volatility) will allow you to hold good idea longer while at the same time not taking on increased risk.

Trade expectations can be a bit tricky with changing market environment. Although one must have conviction in their trade idea to take full advantage of them, you must take into consideration that pullback/bounces in the changing markets will be much more severe than normal. Therefore as a risk manager you must extra precaution around support and resistant levels by exiting into momentum and then possibly adding back to the position if markets continue in your favor.

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