Do You have an Exit Strategy? It’s Harder Than You think 
Sometimes your decisions are made for you. Like when you have a losing trade that has gone ‘beyond redemption’. Maybe a long spread that has gone way out of the money. Exit? No problem, just take the loss and move on. You just paid ‘the rent on the shop’. Other times it gets complicated, like when you are a bad trader like me.
Some Choices Can be Made Before Entry.
Say for example you have a trade that cost you 10 and you have traded multiple contracts-let’s say 10. You paid 100(10×10) but now that trade is worth 400(40×10). A smart trader might say, close out 3 lots,for a credit of 40×3= 120. Now it’s a free trade and a tiny profit. You hold the remaining 7 to expiry and hit the max profit of 100. Close out half, at 40 and take some profits? There is a school of thought that says entry is irrelevant-exit is everything. To an extent that is true- ponder awhile! Is there a right answer? Very far from it-there are numerous right and wrong answers. Choices are virtually infinite and beyond-unless somebody else knows better…..
Set a Price Target?
Why not -it’s as arbitrary as closing out partial lots, or ‘legging out’. I decided on a fab trade this week to close out the entire position. This numpty thought the market was as likely to smash up 2% as to drop another 2.5%-either move would have negated a big profit. It was a debit of around 10 and anything >40 was acceptable to close. Today it hit 100, I closed out for……………………………………………………………………………… 71. Am I disappointed? No! I’m nicely in profit, and we all have our own risk tolerance. What’s yours?
