This is a common question in the live call room and it has no clear cut answer. See the thing is that each trader has a different style and so for each trader the level to take profit and get out of a rally will always vary. I have heard many different schools of thought but my best advice is to just do “what works for you”. In other words just because I exit with certain criteria does not mean that you should or that Bob should. I make my calls in the live room based on what I am doing and how my fund operates and generally we are in the school of thought of being consistent rather then trying to get every single tick on the table.
So let me share with you why this morning I recently exited the futures market from a day trade near the open. Bottom line was simple that we had a nice run and that at this point we where a few SD away from the mean. The higher away from the mean of the move we get the less the probability becomes of more forward or upward movement. The second thing that alerted me to exiting was the fact that we are now trading above our initial balance. (email me if you want to know more about IB). Look at the chart above and you will see how this YM futures contract was trading above it initial balance area after a very strong uptrend. In this type of opening action usually the IB will be a good bracket for the days action and so I exited all positions. Now if the market continues to take off so be it. We still had a fun ride.(www.tradeinwaves.com)
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