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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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