Exit rules

Overview

What applies to entry rules also applies to exit rules.

Entry rules

The exit rules determine when to close a position, whether it is for a buy (Long) or a sell (Short).

Note:

• In trading, a strategy must include both entry and exit rules to actively manage positions.

• In investment, you can define entry rules only if you wish to accumulate assets without planning systematic selling. In other words, it is possible to have no exit rules.

Your exit rules and conditions can of course be based on technical indicators, patterns, units of measure or any other condition already used in the entry rules.

You can also use a stop-loss as well as take-profits. It is also possible to perform partial exits of your positions, thus allowing you to secure gains or minimize losses before the full closure of a position.

Using a stop-loss

To limit loss on a trade, a stop-loss can be specified in your exit rules. The stop-loss can be expressed as a percentage, as a price, as a price change, in ticks, in pips, in points, in changes of indicator values or in multiples of the ATR.

You can also place your stop-loss at a technical level, such as the high or low point of the last X days, for example.

The stop-loss can be fixed, trailing and moved to breakeven if needed. You just need to specify what you want in your exit rules. The possibilities are numerous!

Our artificial intelligence knows that for a buy trade, the stop-loss is placed below the entry price, and that for a sell trade, it is placed above the entry price.

However, you can separate buy and sell trades, giving if necessary a certain stop-loss for buy trades, and another stop-loss for sell trades.

Examples:

"Place a stop-loss at 2 ATR below the low or high of the last 5 days."

"We cut the trade if the price moves 4% against us."

"We cut the trade if the price moves 4% against us."

"Trailing stop-loss at 1%, which is moved to breakeven when 1.5% profit is reached."

"SL at the low of the last 10 candles for a buy trade. SL at the high of the last 10 candles for a sell trade."

Using a take-profit

As its name indicates, the "take-profit" is used to “take your profits”, that is to close your trade to secure your gains.

It can also be expressed as a percentage, as a price, as a price change, in ticks, in pips, in points, in changes of indicator values or in multiples of the ATR.

Another notable unit of measure for the take-profit is "R". It is the reward/risk ratio. In other words, it is the distance between the entry price and the stop-loss on your trade. By expressing the take-profit in multiples of R (e.g.: 1 R, 2 R, 2.5 R, etc.), your trade closes when the specified reward/risk ratio is reached.

The take-profit can be full or partial, depending on whether you want to secure all or part of the gains on each trade.

As with the stop-loss, the take-profit can also be trailing.

EExamples:

"Take-profit at 2R."

"Partial TP of 50% when the price has increased by 10 pips, and 50% when it has increased by 20 pips."

"We set a take-profit at 5% from our entry price."

"TP at 1R with a trailing of 0.25R."

"We take profits at +2 ATR."