Simple profit-taking methods for Trend Hunter Strategy
Trend Hunter Strategy is based on taking Maximum theoretical and logical profit until end of trend.
Trend is trader's best friend. Professional traders, always take the most possible profit out of the trends. But a common mistake among traders who don't have correct educations is an early exit with a small profit. Fearing from trend reversal and profit losing, won't allow these people to take theoretical and logical profit from the market.
As it's not simple to recognize beginning a trend, it's not simple to recognize ending a trend (which is in fact beginning of reversal trend) too. But Trend Hunter Strategy, suggest a simple method for taking maximal profit until the probable ending of trend. We advise this simple method especially to those investors with less experiment in financial markets or don't have enough time for everyday analysis.
First simple profit taking method: Stepped profit-taking
Simple profit-taking method is based on "Probability rules" and "Trend lifetime". Whenever more is passed from a trend's life, the probability of its ending and beginning of reversal trend will increase. In the other side ending the trend will happen most probably when trends hit any of support or resistance levels. Hence in this method by recognizing levels in front of the trend, when the price hits them, we take part of our profit. In other words, while approaching the probable ending of the trend, we draw our investment out of the trend in steps and take our profit.
In this method, we define take profit points (Partial Take Profit) for our trade and will leave them - nothing more to do - (Hard Take Profit). This way with beginning and growing of trend, our profit will increase too and gradually gained profits, add to our account balance step by step.
If you are using weaker trading software like MetaTrader, that doesn't have a feature for placing multiple take-profit for a single trade (Partial Take Profit), then you have to divide the trade's investment into multiple trades and place as many trades as take-profit count.
Buy trades result:
The figure shows the first series of buy trades based on the signal of forming a hammer at 2014-09-08. (Click here to see the signal!)
In that day, we entered the market with 7 buy trades with already specified take-profit points (Hard Take Profit) and another buy trade without the take-profit point (Free Take Profit).
As seen, first four trades were closed when the price hit their take-profit points and generated a profit of 1,537 pips in 8 working days. Then market returned and has closed other trades in their entry point.
The second series of buy trades are based on a signal of forming a hammer at 2014-10-15. (Click here to see the signal!)
In that day, again we entered the market with 7 buy trades with already specified take-profit points (Hard TP) and another buy trade without the take-profit point (Free TP).
As seen, until 2014-11-06 six trades were closed when the price hit their take-profit points and generated a profit of 4,576 pips in 15 working days. 7th and 8th trade are in a total profit of 3,906 pips until 2014-12-05.
Second simple profit taking method: Free trade (Free Take Profit)
We always leave part of our investment without specifying the take-profit point. This way, if trend passes over the last take-profit point, more profit might still be possible for us. Last take-profit point is usually where a strong support or resistance level exists and it's unlikely expected for the trend to pass over it. Yet, in probability world of financial markets, any event is probable.
In this method when "trend reached its end of movement", we close the free trade and take the profit (Soft Take Profit).
Users of MetaTrader software can add a trade without the take-profit point to their trades.
Buy trades result:
As seen, we have invested with buy trades in this currency pair at 2014-07-14 when receiving the signal of forming a trough(valley). (Click here to see the signal!)
In that day, we entered the market with 6 buy trades with already specified take-profit points (Hard Take Profit) and another buy trade without the take-profit point (Free Take Profit).
All six trades were closed when the price hit their take-profit points and generated a profit of 2,252 pips. But since our forecast was Continuation of Uptrend, so we keep free trade (Free Take Profit) open.
Buy free trade result:
Buy free trade (Free Take Profit) must be kept open while Beginning of downtrend is not announced. This way, while trend continues, our profit simply increases.
As seen in the figure, free trade has reached a profit of 1,719 until 2015-01-23.
The advantages of these methods
Ease of analysis
Finding support and resistance levels is one the most simple parts of theTechnical Analysis. so we can easily define take-profit points. Also after entering the market, the only thing that we should analyze is the probability of "Ending of trend".
Ease of trading
In this method, after entering the market and setting take-profit point and especially after "modifying stop loss point at the entry point", there will take no trading activity. Since weeks and even years, while the trend is moving its way, our profit is increasing and there is nothing to do.
In this method, it's just enough to review and analyze the chart once a week and not everyday analysis. So this method is best suitable for those investors that don't have enough time for everyday analysis.
Analysis in weekends
In this method, we can calmly review and analyze the market in weekends (Sat and Sun). "Forecast City weekly forecasts" is also being updated every week on Saturday and help us make a decision on "Ending of trend".