What is your trigger for exiting a trade as a winner? Please don’t give me some nonsense about this or that key level. Unless you are intuitively trading for profits, which are probably less than 1% of the trading population, how exactly do you book profits?

Again this concept sound simple enough, but when you factor in that most traders have an expectation of what the market will do next it makes this almost an impossible task. For example, back in March of 2014 my business partner and I were long put options on EUR/GBP. We had about $20k in profits. Up to this point we had executed our trading plan flawlessly. At the time we expected the EUR/AUD to hit the 6k – 7k level which it ultimately did in ’15 but for this fight the bears did not have enough energy. Instead of listening to what the market was telling us in terms of the correction was over, we held on for what we expected to happen. This crucial mistake meant that instead of coming out slightly north of 40k, we loss the 20k. Afterwards we were talking about this traumatic experience and both of us had the same feeling that it was time to take profits, but because we did not have a clear trigger we just held on for what the market was going to do next.

Do you find yourself holding on for what your analysis says the market should do next? You must figure out when it’s time to walk away with the cash to move on to your next conquest.