Simple Profit-taking Methods for Trend Hunter Strategy
Trend-Hunter Strategy is based on taking Maximum theoretical and logical profit until the end of a trend.
Trend is a trader's best friend. Professional traders always take the most possible profit out of the trends. However, a common mistake among traders who don't have the correct education is an early exit with a small profit. Fearing trend reversal and profit loss won't allow these people to take theoretical and logical profit from the market.
As it's not simple to recognize the beginning of a trend, it's not simple to recognize the ending of a trend (which is, in fact, the beginning of a reversal trend), too. However, the Trend Hunter Strategy suggests a simple method for taking maximal profit until the probable ending of the trend. We advise this simple method, especially for investors with less experience in financial markets or who don't have enough time for everyday analysis.
First simple profit-taking method: Stepped profit-taking
The 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 a reversal trend will increase. On the other side, ending the trend will happen most probably when trends hit any of the 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 Partial Take Profit points for our trade and leave them - without doing anything - (Hard Take Profit). This way, with the beginning and growth of the trend, our profit will increase too and gradually gain, adding to our account balance step by step.
If you use the MetaTrader software for trading, this software does not allow you to define multiple TPs for one trade. Therefore, you should place several trades with the same entry point but different TPs.
Buy trades result:
The figure shows the first series of buy trades based on the signal of forming a hammer on 2014-09-08. (Click here to see the signal!)
On 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, the 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. The market returned and closed other trades at their entry point.
The second series of buy trades are based on a signal of forming a hammer on 2014-10-15. (Click here to see the signal!)
On 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 the trend passes over the last take-profit point, more profit might still be possible for us. The 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 the probability world of financial markets, any event is probable.
In this method, when the "trend reaches its end of the 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 invested with buy trades in this currency pair on 2014-07-14 when receiving the signal of forming a trough(valley). (Click here to see the signal!)
On 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 a Continuation of an Uptrend, we keep free trade (Free Take Profit) open.
Buy free trade result:
This Buy trade (Free Take Profit) must be kept open while the Beginning of the downtrend is not announced. This way, while the 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 the take-profit point, especially after "modifying the stop loss point at the entry point", there will be no trading activity. For weeks and even years, while the trend is moving its way, our profit is increasing and there is nothing to do.
- Saving time
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 suited for those investors who don't have enough time for everyday analysis.
- Analysis in weekends
In this method, we can calmly review and analyze the market on 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".