Beginning traders multiply trading errors when they start out. Among the main ones, we can cite the abuse of leverage, nonexistent risk management, entry and exit of positions without trading strategy, the refusal to accept the loss but also the lure of gain. When they win, they want to earn a lot. They say that the fact that their scenario is good, that he has done a good analysis must allow them to generate big profits on a single trade. Without necessarily using leverage, they want to capture large movements. They do not agree to take only part of the movement. Almost all beginning traders aspire to this, to capture the entirety of a bullish or bearish wave. Yet it is impossible. If this has happened to you, it is only because of luck and not because of your talent as a trader.
Beginners always try to anticipate movements. For this, they take a position early without waiting for a real buy / sell signal. For example, they will take a buy / sell position just because the price has just hit a support / resistance. Another classic is to anticipate the release of a Chartist figure. For example, if a chartist figure in SUMMER has formed, they will buy / sell without waiting for the break of the neck line.
These are serious mistakes. You must always wait for a buy / sell signal from your trading strategy to take a position. Buying or selling just because the pattern looks bullish / bearish is not enough. This will greatly increase your number of losing trades. Take a classic case with a double / triple top. If you sell before the neck line is broken, the figure is not yet validated. Who tells you that this is not just a consolidation range and that a bullish exit is not going to happen ...?
I took the example of chartist figures but I could also take the example of a technical indicator with the differences. Discrepancies generally work quite well over large time frames, but any position must be confirmed by a buy / sell signal on your price chart.
To secure your entries and reduce your number of losing trades, you must therefore accept to lose part of the movement, generally the beginning of the wave. It is precisely this first impulse that allows you to validate your bullish / bearish scenario and therefore allows you to take a position in good conditions. If your analysis is good, the chances of the movement continuing are greater.
If the buy / sell signal is not a false start to hit your stop loss , you have two options to exit the position. Either you have set a target price (before taking a position!), Or you let the movement carry until the first signs of reversal.
Going out on goal : Going out on target does not mean that you must not be active during your trade. It is indeed rare that the course goes in a straight line to your goal (unless it is close). You must gradually raise your stop loss to first reduce your risk and then gradually protect your gains. This can be done manually or through a trailing stop.
Exit on exhaustion of movement : The signs of an exhaustion of the movement are various but they are often seen by analyzing the Japanese candlesticks (formation of dojis of reversal, candlesticks smaller and smaller .... Cf Detect a reversal of trend in trading ), the chartist figures but also technical indicators (notably thanks to differences).
Whichever method you choose, you will not exit your trade at the highest / lowest. Even when watching for movement exhaustion, you have to wait for confirmation to cut your trade and therefore lose part of the movement. By going out by objective, the movement may continue afterwards (it is also important to set realistic course objectives which have a higher probability of being achieved).
To trade in good conditions, it is essential for you to agree to lose part of the movement at the time of taking a position but also at the exit of trade. It is for this reason that it is impossible to buy at the lowest and sell at the highest. If you hope to be able to do so, you will inevitably end up losing your capital.