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GEORGE MOLDENHAUER wrote:
> Rememebr the old saying....you should let your profits run and cut your
> losses short. Setting a profit target in my opinion, is in violation of
> these rules.
I agree totally. The real reason, though, is that the potential move has
absolutely nothing to do with your objective, which ought to be to maximize
your profits, and not just settle on an arbitrary amount. As the trade becomes
more profitable, potential drawdown decreases in relation to the next few bars,
which is the reason why this rule makes sense. Personally, I apply very tight
exit criteria early in a trade (if things don't go a certain way very early, my
reason for entering has been violated), which becomes progressively relaxed
(but not too much so) as it demonstrates potential profitability. This allows
for very small losses while still being able to stick around for decent size
moves.
Regards,
A.J.
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