Similarly to the way you've learned to enter a trade it is time to learn how
to close it. You need to find a minimum of 100 examples on the charts
that feature the rules according to your strategy.
I really don't care if the closing point closes the trade with a profit or with
a loss, as long as it is according to the strategy’s rules. I care about
finding a minimum of 100 examples of closing points according to the
strategy you chose to work with.
I'll continue with the simple strategy I introduced to you.
The rules of closing a trade according to this strategy are as following:
Stop loss is set below the low of the candlestick that broke the resistance
level, or above the high of the candlestick that broke the support level.
The profit target is two times the stop loss size.
As I said, I am going to search for a minimum of 100 examples of this
specific closing strategy.
In this example I can see that closing this trade meant a profit that was
two times bigger then stop loss size. As I said, in this stage, I really don't
care about profits or losses.
In this example, the trade closed with a loss. However I only care about
seeing as many examples as possible that feature correct closing points
according to the strategy I chose.
So, as I said, I should collect as many examples as possible and analyze
the screen shots so that nothing surprises me when I go live. I should be
prepared for all the possible scenarios. After I've seen many examples, I
start using the exiting rules on a demo account.
Even if you didn’t execute a trade that turned out to be a loss had you
entered it, learn now how close it correctly. Practice it over and over
again till you feel that nothing in market can surprise you: until you easily
find the perfect time to close a trade according to your strategy.
So, after you've learn to open and exit a trade, it is time to learn how to do
it together. Our fourth and last stage is: