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The Golden Rule to Taking Profit When Trading Fundamentals

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What You'll Learn in This Training

The Challenge Every Trader Faces

  • • You're not alone - many traders struggle with knowing when to take profit
  • • The two common mistakes: taking profit too early and missing the move, or holding too long and getting stopped out
  • • Why profit-taking is more complicated than entry analysis
  • • The need to account for changing sentiment and fundamental drivers

The Easy Scenario: When Your Trade Becomes Invalid

  • • Rule #1: Close immediately when something makes your trade invalid
  • • Example: You're selling AUD/JPY on risk-off sentiment, then risk-on news hits the wires
  • • No questions asked - exit the trade right away when the thesis changes
  • • This is the clearest and easiest profit-taking decision you'll ever make

The Golden Rule: A Solid Repeatable Process

  • • Finding balance requires a process that works for you
  • • The key is making it repeatable and psychologically comfortable
  • • Split your risk into "clips": Instead of risking 1% on one trade, take 2-3 positions at 0.5% or 0.33% each
  • • This allows you to take profits in stages without closing your entire position
  • • Example: If risking 1%, take two trades at 0.5% each, or three at 0.33% each

Using Simple Technical Levels for Targets

  • • Use basic technical analysis to identify profit targets
  • • Key levels to watch: Psychological price levels, swing points, support/resistance areas
  • • Favorite tool: Pivot points (especially for short-term trades)
  • • Your first target is always the very next significant technical level
  • • Second target is the next significant level after that
  • • Third target is the level beyond that

The Step-by-Step Process

  • • Step 1: Enter your trade with 2-3 clips (split positions)
  • • Step 2: Identify the next key technical level (pivot, S/R, psychological level)
  • • Step 3: Take profit on your first clip when price reaches that level
  • • Step 4: Move your stop loss to breakeven on remaining positions
  • • Step 5: Look for the next significant level for your second clip
  • • Step 6: Repeat the process until all clips are closed

Real Example: Trading NZD/USD

  • • Look for confluence of multiple technical factors at one level
  • • Example: Recent swing point + monthly/weekly trendline + S1 pivot + psychological level
  • • This "overall area" becomes your first profit target
  • • Close one clip, move stop to breakeven on the rest
  • • Even if the trade doesn't reach your second or third target, you've locked in profit on the first clip

The Psychological Edge

  • • Moving to breakeven "too quickly" might seem statistically suboptimal
  • • But it provides massive psychological comfort and protects capital
  • • Avoid the "could have, should have, would have" trap
  • • You never truly know if the market will give you another 20, 50, or 100 pips
  • • Don't beat yourself up for not catching the entire move
  • • Stick to your process no matter what - consistency beats perfection

When It's Okay to Deviate

  • • Sometimes there are legitimate reasons to break your process
  • • Example: Natural gas trade with unexpectedly high swap charges (cost of carry)
  • • If holding costs are eating into your profits daily, close the trade early
  • • But only deviate when there's a clear, obvious reason
  • • For day-to-day trades, stick to the process religiously

The Bottom Line

  • • Close immediately when your trade thesis becomes invalid
  • • Use multiple clips to take profits in stages
  • • Target the next significant technical level (pivots, S/R, psychological levels)
  • • Move to breakeven after taking your first profit
  • • Stick to your process no matter what the market does afterward
  • • Trading is about consistency and repeatability, not perfection

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