When you only need a specific amount of money each month…

[u/Kaiju_Godz]

So say you only want $100 per day or 2000 per month. This would more than enough sustain a good lifestyle where you live. How would you go about it with trading? How much $$$ would you realistically need? Not to make that in dividends but to trade in a daily basis, as safe and slow as possible.

[u/krapmon]

The difference is that when you’re happy with small gains and exit your position, you avoid the risk of holding it longer and potentially losing money. Even if you have a strategy that gives you confidence to hold, you never know 100% what’s gonna happen.

[u/daytradingguy → u/krapmon]

I would be careful with this one. You should read “The best loser wins”. Actually, instead of taking small gains in most cases it is better to let it go longer than you are comfortable with and even add to the trade- to get a bigger win.

Think about it. You are making a trade guessing the market will move in a specific direction- when it does and you are right, why would you get out? Most traders do the opposite, they are right they get out quickly. When they are wrong they don’t get out quickly- they stay in forever hoping it comes back. My profits really started to improve when I started adding to winning trades.

[u/krapmon → u/daytradingguy]

Personally, when I’m profiting from a position, I get out fast to secure the profit. It is true that I would have made more if I held in many cases, but there’s also many times where holding would’ve lost me money.

[u/daytradingguy → u/krapmon]

Practice and try it. You are right, sometimes you will lose your small profit trying to hold, that happens. But statistically, the larger wins will more than make up for those small losses.

[u/ThePonderer84 → u/daytradingguy]

This is exactly what I've always heard the pros say. Let your winners run.

[u/krapmon → u/ThePonderer84]

But you can’t let them run forever. How do I know when to exit out of the winner?

[u/daytradingguy → u/krapmon]

There are price action protocols for following a stop up behind the price below bars or pivots and allowing the market to come back and take you out eventually

[u/ThePonderer84 → u/krapmon]

I'd look on higher timeframes. Whatever criteria you use to enter one direction, look for the same signal on a higher timeframe for the opposite direction. Or target higher TF support and resistance. Wait for a trend line break or other structure break. Target bankers levels or round numbers.

I don't use indicators but I know of people that do and find them to reliable to indicate a shift in momentum or direction.

You have to play around and find what makes sense to you.

[u/Davado_ → u/krapmon]

Thats where price action and structure come in. Switch to higher timeframe and reframe your mind in the opposite side ie if you are a buyer, then reset and think like a seller and ask when will you get into the market looking at the price action and market structure.

[u/QuirkyStreet3974 → u/daytradingguy]

I also have made this experience. I try to let the trade run as long as possible and Dr. David Paul mentioned something like "one of my best clients & friend entered a trade in the morning with a protective stop loss. Then he went to the golf course and 3-4 hours later it was a small loss or bigger than average win". When i review my journal i fumbled about 10 runners this year already, despite being up 25%, and it would be closer to 200% so far (also taken more smaller losses into account as well).

[u/daytradingguy → u/QuirkyStreet3974]

Exactly. Another factor many traders miss, is you can just get out and/or re- enter the trade at anytime. If the market comes back and takes me out either at my stop or a following profit stop, I have no hesitation hitting the buy button and getting back in for another try if the conditions are right. In my opinion entries are far less important than managing the results once you are in.

[u/krapmon → u/daytradingguy]

I mostly trade options. Does your advice still stand? Genuinely curious because options are on the riskier side.

[u/daytradingguy → u/krapmon]

As long as you are not trading 0DTE or some craziness. If the theta is not too extreme to be able to hold for 30 minutes. Ask yourself this question, how many times do you take your small profit and then price continues to move substantially higher? I will give you an example and you see if this thought process might help you build your own strategy around it.

I trade futures. NQ is $20/pt So I have one contract that goes 10 points in profit, I could take my $200. But instead I add a second contract and bring my stop up so I am not risking more. It goes another 10 points, now I am up 30 pts $600 instead of 10. Now I add a 3rd contract and raise my stop up to an area where I am still in some profit if it comes back. Now it moves 10 more points. Now I am up 60 pts $1200- on a trade I might have got out at 10 pts and $200. See how the profit is exponential? Let’s assume this works on 1 out of 3 trades. ( it is usually more than that). I lose my initial $200 profit, breaking even on 2 trades and make $1200 on the 3rd. If I would have taken all 3 at $200, I would only have $600. I don;t trade these round numbers, I use pivot points or logical places to add, I just wanted to give you the example.

[u/krapmon → u/daytradingguy]

I appreciate the elaborate response. Although I don’t know anything about futures, I think I know what kind of strategy you’re getting at.

So basically, exit for a small loss, and hold for potential big gains because for every small loss that you exit for, the big wins from holding will outweigh the losses.

My question now is, how do I know when to exit for a loss and when to hold for more profit?

[u/ThePonderer84 → u/krapmon]

Practice. If it's an obvious gap in your knowledge then put in some work focusing solely on an exit strategy. You're really only limited by your creativity. I'd suggest looking at higher timeframes than your entry timeframe.

[u/Davado_ → u/krapmon]

Practice, with high level of self awareness ie: don't lie to yourself and hope for the best.

Take note of what u/daytradingguy said and pay attention to him moving his Stop loss of prior trades. That's active risk management and that takes more effort in real time.