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Closing your Trades with the Camarilla {b} Equation

When to take your day trading profits

If the move goes your way, and you find yourself in profit, there then comes the question of when do you exit and collect your cash? There is an old saying that "nobody ever went bust taking a profit". As you will come to realise as your day trading training continues, this is incorrect; a sizeable majority of would-be day traders DO go bust taking profits too early, combined with a pathological inability to cut losses in a timely fashion. What we want, once again, is a fairly low risk strategy. The Camarilla {b} Equation will suggest an exit point for your day trade, based on a number of factors, including volatility the day before.

Exiting from a day trade


This exit point suggestion is exactly that, a suggestion. It highlights a level where we would normally expect the market to waver, perhaps reverse temporarily in order to test the conviction of the participants who have created the sudden trend. Sometimes it does indeed mark a reversal. How then do we exit safely while not abandoning further easy profits? There are a number of techniques for this, primarily the technique of 'trailing stop losses'. This technique is covered in detail in the 'MasterClass' section.

The other common technique is to 'scale' out of the position; once again this topic is covered in the 'MasterClass'. As you gain in experience as a day trader, these concepts will become second nature to you.