Automated Trading Exit Strategy can overcome the emotional trading problem. The typical human behavior in trading is cutting profits too short, and letting losses become too big. Automated exit strategies can be very useful in overcoming this emotional tendency. Using automated exit strategies will free a trader’s mind to pick great trade entries while their exits are unemotionally managed and their exit rules are perfectly executed.
All traders today have heard about the golden rule of trading, which is to cut your losses quickly and let your profits run. Even though we’ve all heard this sage wisdom, it’s been proven that the normal human behavior is to do just the opposite. Most traders want to ring the cash register as soon as they start getting into profits and will jump out of a winning trade too soon. On the other hand, most traders don’t want to be wrong about the trades they picked, so they will hold on to losing trades hoping they will turn around and be winners. In essence, the typical human behavior in trading is cutting profits too short and letting losses build up to be big ones. Obviously that’s a disaster for a trading account, but it’s why automated exit strategies can be very useful for any trader.
With automated exit strategies a trader can use his time and expertise in making more initial trade entries, and then letting an automated exit strategy take over the exit management. This accomplishes 2 things:
First, to be successful, traders must overcome the natural human tendency of holding their loosing trades. Good stop loss management is the risk management aspect that you need in order to overcome this emotional reaction. By putting a stop loss in place you will be protected against large movements from holding losing trades too long, resulting in excessively large losses. An automated exit strategy is unemotional and will perfectly execute your stop loss exit.
Secondly, the trader’s natural human tendency to take profits too quickly is a major problem that limits a trader’s success. This emotional reaction results in overly short holding times and small trading profits. By using an automated exit strategy, the exit management is non emotional and is carried out without cutting profits short. This frees the trader to be involved in making more entries while the exit process is elegantly handled for them.
To be a successful trader, you need to overcome the human tendency to make reactionary trading decisions. Automated exit strategies are a great tool for traders that have not yet conquered the emotional issues that come up while trading. Using an automated exit strategy will free your mind to pick great trade entries while your exits are logically managed following good exit management rules.
Are you tired of struggling to find profitable trades? Are you looking for an edge in the markets? Look no further than our custom indicators and trading systems for TradeStation.
Gain a trading edge with our Price Action and Fractal Channel indicators, which can help you spot high probability trade set-ups.
Understand the power of Multiple Time Frames and Time Based Volume to take advantage of trading opportunities across different timeframes.
Our complete Turnkey Trading Systems operate on any Forex, Futures, and Stock symbols, and include a Visual Chart Trading strategy to execute trades directly from your charts.
Experience the power of computer-assisted trading, combining the strengths of human intuition and expertise with the sophistication of indicators and RadarScreen.
Let our expert-level Trading Indicators and RadarScreen do the heavy lifting of finding possible trades and managing trade exits, so you can focus on what you do best - making trading entries.
Our Learning Center is filled with free educational articles and trading videos to teach you about the Art of Successful Trading.
Learn about the critical fundamentals for profitable trading and enhance your knowledge about the Art and Science of Successful Trading.
Ready to start trading smarter? Browse our products and get started today. Transform your trading with custom indicators and strategies for TradeStation. Gain the trading edge you need to succeed in the markets.