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Deciding when to exit from a profitable trade
Rudiger Lippert
posted May 22, 2015

A lot of the time when I'm thinking about strategies, I break it down into three main questions:

1) What signal tells me to buy (sell) the stock?
2) What will my stop loss level be?
3) When should I take my profit if it doesn't stop out?

For question 1 there are any number of signals one could use. For question 2 I usually use some fixed percentage drop or maybe a multiple of the stock volatility. But, I haven't found very good answers for question 3.

So far my two ideas have been: exit when the position drops some percentage from it's highest point since purchasing and exit due to some other exit signal (i.e. the opposite of the buy signal).

Do any of you have good strategies for exiting a profitable trade?

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