Exit your positions to book profits, take losses or terminate poor opportunities. How well you accomplish each of these important tasks significantly affects your trading capital. Graceful exits require discipline just when peaking emotions cloud judgment. So take a deep breath and clear the mind before attempting to close out a trade. A good exit is far more valuable than a great entry.

Take profits when the market allows them. Your best exit will come when you sell into the crowd just as advancing price approaches a strong barrier. Choose a Profit Target (PT) in the initial reward:risk evaluation, but reconsider that location as each price bar presents new information. Pullbacks can start at any time. Sitting through a retracement will undermine good gains unless your trading strategy accurately targets several price waves.

Plan for retracement before entering the position. If you're trying to take two or more price swings out of the market, pay close attention to congestion after the first thrust. Place a trailing stop that locks in some profit should the new range break the wrong way. Move that stop through the congestion as soon as price breaks into a new wave. If the initial move doesn't offer enough profit to ride out the congestion, consider taking your money right there and moving on to the next trade.

Identify your initial failure price or signal before position entry. The Failure Target (FT) admits that the setup has collapsed and the trade must be broken. S/R violations point to natural FTs. Intraday traders see them when prices cross primary moving averages or print pattern rollovers. Position traders find them in First Rise/First Failure events and false breakouts. There are good reasons to alter FT values after execution, but newer traders risk self-deception when they do so. Rely on the written plan and leave FTs intact until your experience allows greater flexibility.

Good exit doors open and close throughout the trading day. After missing one, determine the next available course of action immediately. Sometimes you must take your medicine and get out no matter where you are. This may hurt the bottom line but still present the best strategy under the circumstances. Other times there will be no easy answer or right decision for that particular trade. Perhaps a long position jumps into a gain, but then suddenly drops into a sharp pullback. You could end the trade immediately or risk a loss while waiting for a new swing back up. The right decision often comes only with experience. Some pullbacks will surely bounce, while others drop into the pit of hell.