Ten Exit Rules

-----The victorious general first wins and then seeks a battle, while the defeated general first battles and then seeks victory. In all wars, one should plan withdrawal before advancing! Winning first means to prepare oneself with the basic conditions for victory before the war. For all trading orders, before you get on board, you must have an exit strategy, at least to ensure that you do not incur huge losses. ‘A wise man does not stand under a leaning wall.’ Not being defeated is a prerequisite for defeating the enemy. The first priority in investment is to preserve capital and then gain profits, ultimately achieving sustained and steady profits! And how do the majority of retail investors play in the coin circle? All in, rushing into the market, and then what if they incur huge losses? They bury their heads in the sand! They claim to be holding coins with a Zen attitude and value investing, never seeking survival, only seeking a heroic and eternal demise! Plan your trades, trade your plan. How can we effectively set exit strategies in your trading plan? Here are ten common exit methods: 1. Capital exit rule: The fixed amount stop loss rule is the simplest and most effective stop loss method, setting the loss amount as a fixed percentage. Once the loss exceeds this percentage, Close Position promptly. This method is generally suitable for new investors and high-risk markets, especially the cryptocurrency market. The compulsory effect of the fixed amount stop loss is quite evident, and investors do not need to overly rely on market judgments. 2. Risk decision-making system: Different time frames have different capital management requirements. For example, for intraday short-term trading, the total capital loss should not exceed 1%, for daily trading not exceed 3%, for weekly trading not exceed 5%, for monthly trading not exceed 10%, and for annual trading not exceed 30%. Specific settings should be targeted based on individual risk preferences. 3. Maximum drawdown percentage exit: If the price rises after buying and then falls from a relative high point, you can set the percentage of the decline from the relative high point as the stop loss target. This percentage value is also determined by individual circumstances and can generally refer to the maximum drawdown percentage. Drawdown exit is actually more frequently used in the case of taking profits: Adjust the exit position according to market changes, ensuring that the risk-reward ratio is always greater than 1! It is particularly important to note that: 1) When your profit exceeds the set loss by a factor of two, raise the exit position to your Open Position average price, ensuring that you do not incur losses; 2) When your profit is twice the potential risk, ensure that the profit drawdown does not exceed 50%, ensuring that your profit is at least greater than your planned risk; 3) When your profit is three times the potential risk, ensure that the profit drawdown does not exceed 30%, ensuring that your profit is at least 2.1 times your planned risk. 4) After reaching the target of swing trading, Close Position 50%. Why close at least 50% of the position after reaching the target? In the case of investor profits, cash out 50% of the profits, meaning that you absolutely cannot use all the profits to bear the risk. By limiting the risk within a certain range and retaining part of the surplus, profits will accumulate. If the other 50% of the profit is reinvested successfully, performance will be greatly improved. In the event of failure, the overall performance will still remain profitable, and sustained profits will continue until the trading account reaches a level that can withstand high risk again. This is one of the true meanings of low risk and high returns!

Second, Sideways exit Sideways exit is one of the time stop loss rules, generally used in conjunction with the capital exit rules to fully control the risk. People generally pay attention to spatial stop loss, but do not consider the time factor. As long as the price falls to a pre-set price, they cut positions and exit, this is spatial stop loss. The advantage of spatial stop loss is that it allows waiting for a big market move by sacrificing time, but the drawback is that after a long wait, it is often necessary to stop loss, wasting time and losing money. Therefore, the concept of time stop loss needs to be introduced. Time stop loss is a stop loss technique designed according to the trading cycle. After entering a position, if it cannot leave the cost zone in a timely manner, it means that you did not enter at a critical point. What is a critical point? It is the entry point that can quickly leave the cost after entering a position! It is often the point where the form ends and the trend starts again. The key is to judge when the reversal or Relay form ends. After entering a position, if it cannot leave the cost zone in a timely manner, it means that the basic skills have not been well practiced! Critical points include: dense trading area, specific Candlestick combinations, moving averages, previous highs and lows, integer relations, Bollinger bands, etc. (specifically explained in the trading skills class). Usually, as long as it is not effective within 3-7 times your operating cycle time, you can Close Position and exit first! For example, if you choose a daily trading cycle, if the pump amplitude of the Build a Position 5-7 days does not reach 3%, it means that your timing for getting on board and grasping the critical point is not accurate enough, so you can exit first, otherwise you will waste more time cost!