1 00:00:00,270 --> 00:00:05,590 Keys to Position Management Let's not forget that our main objective, over and 2 00:00:05,590 --> 00:00:10,390 above looking to maximize profit, should be the preservation of capital. For 3 00:00:10,390 --> 00:00:14,950 this reason, among other things, we actively analyze market sentiment. We 4 00:00:14,950 --> 00:00:19,110 conservative approaches in our trade operations and we risk low percentages 5 00:00:19,110 --> 00:00:20,110 our account capital. 6 00:00:21,330 --> 00:00:26,070 Our style is reactive and defensive, the best strategy for achieving our goal. 7 00:00:26,760 --> 00:00:30,280 In this section, we are going to look at some concepts that will help us to 8 00:00:30,280 --> 00:00:32,259 achieve our objective of preserving capital. 9 00:00:32,800 --> 00:00:37,180 These are concepts that are sometimes overlooked but can greatly influence our 10 00:00:37,180 --> 00:00:38,180 long -term result. 11 00:00:38,780 --> 00:00:42,620 The first of them has to do with the trading period and with the release of 12 00:00:42,620 --> 00:00:43,620 fundamental data. 13 00:00:44,180 --> 00:00:47,760 Regardless of the asset you are trading in, there will eventually be some 14 00:00:47,760 --> 00:00:51,320 fundamental news or some critical moment in the market in relation to it. 15 00:00:51,540 --> 00:00:55,180 Knowing when this will happen can help you carry out the proper position 16 00:00:55,180 --> 00:00:56,180 management. 17 00:00:56,490 --> 00:01:00,650 With regard to trading hours, it's worth noting that trading sessions experience 18 00:01:00,650 --> 00:01:05,330 their highest volume during the hours when they overlap, since this is when 19 00:01:05,330 --> 00:01:06,890 largest number of traders are active. 20 00:01:07,210 --> 00:01:09,730 This is especially the case in currency trading. 21 00:01:10,290 --> 00:01:15,750 If, for example, you trade in futures, let's say S andP 500 futures, two of the 22 00:01:15,750 --> 00:01:18,790 moments to avoid are the opening and closing of the market. 23 00:01:19,390 --> 00:01:23,490 The highest concentration of activity occurs at the opening of the American 24 00:01:23,490 --> 00:01:27,980 session. During approximately the first hour of the session, it is very 25 00:01:27,980 --> 00:01:30,080 difficult to follow the behavior of the market. 26 00:01:30,600 --> 00:01:34,900 Upon the opening of the session, all the trades that took place when the market 27 00:01:34,900 --> 00:01:36,300 closed are reflected in price. 28 00:01:37,080 --> 00:01:41,320 This generates a high level of generally random volatility that can skew our 29 00:01:41,320 --> 00:01:45,620 strategy. For this reason, it is best to wait a few minutes until the market 30 00:01:45,620 --> 00:01:49,560 digests all that noise and the majority of traders start to position themselves 31 00:01:49,560 --> 00:01:50,560 with intent. 32 00:01:52,010 --> 00:01:56,130 and a great deal of volatility is also generated minutes before the close of 33 00:01:56,130 --> 00:01:58,310 session, which could reduce our position. 34 00:01:58,830 --> 00:02:03,010 In this regard, you should also take into account the overnight risk of 35 00:02:03,010 --> 00:02:04,690 the position while the market is closed. 36 00:02:05,510 --> 00:02:09,710 Regarding the release of fundamental data, one of the best tools available to 37 00:02:09,710 --> 00:02:13,810 is the news calendar, specifically one showing news that can significantly 38 00:02:13,810 --> 00:02:17,270 impact the price of the asset which we are interested in trading. 39 00:02:18,250 --> 00:02:22,930 A huge amount of news is consistently being broadcast, so you need to filter 40 00:02:22,930 --> 00:02:25,570 and take into account only the most relevant items. 41 00:02:26,190 --> 00:02:30,130 Depending on which market you want to trade in, certain news items will be 42 00:02:30,130 --> 00:02:34,370 relevant than others. For example, if you invest in stocks, you will be 43 00:02:34,370 --> 00:02:38,130 interested in the financial results of companies, which are usually presented 44 00:02:38,130 --> 00:02:42,670 a quarterly basis, as well as the news specifically related to each asset. 45 00:02:42,950 --> 00:02:46,770 Certain economic data can have a huge impact on the economy as a whole. 46 00:02:47,160 --> 00:02:51,540 such as interest rates, CPI, GDP, and employment reports. 47 00:02:52,200 --> 00:02:56,760 For example, if a fundamental event concerning certain economic news that 48 00:02:56,760 --> 00:03:00,860 affect our position is about to be broadcast, the most sensible thing is to 49 00:03:00,860 --> 00:03:04,020 manage the position to protect ourselves from potential volatility. 50 00:03:04,620 --> 00:03:09,600 In reality, in this scenario, the most advisable thing to do is to leave the 51 00:03:09,600 --> 00:03:12,420 market immediately, especially if you are intraday trading. 52 00:03:13,040 --> 00:03:16,700 Other dates that should be monitored closely are public holidays during which 53 00:03:16,700 --> 00:03:21,180 the markets are closed, as well as common celebrations such as Christmas, 54 00:03:21,180 --> 00:03:22,520 Year, and religious holidays. 55 00:03:22,940 --> 00:03:27,560 Each country has its own holidays on different dates, such as National 56 00:03:27,560 --> 00:03:28,840 and Labor Day, among others. 57 00:03:29,700 --> 00:03:34,780 The page investing .com is a really useful site since it summarizes all the 58 00:03:34,780 --> 00:03:38,460 events in one place, so it's definitely something you should look at. 59 00:03:39,120 --> 00:03:43,580 For stock trading, TradingView itself also has a tool that informs traders 60 00:03:43,580 --> 00:03:46,140 the days remaining until the release of the next earnings report. 61 00:03:46,860 --> 00:03:48,960 You can find it in the lower right part. 62 00:03:49,360 --> 00:03:52,680 In this example of an equity, there are five days left. 63 00:03:53,460 --> 00:03:57,580 Bear in mind that on many occasions the effect we are waiting for a campaign to 64 00:03:57,580 --> 00:04:00,520 have occurs due to the release of this type of report. 65 00:04:01,320 --> 00:04:03,380 This is what happens in this other example. 66 00:04:04,040 --> 00:04:07,500 We are in an uptrend and the market is beginning to develop a potential 67 00:04:07,500 --> 00:04:08,700 reaccumulation structure. 68 00:04:09,040 --> 00:04:13,620 What happens? The earnings report is released, which happens to be well 69 00:04:13,620 --> 00:04:17,980 by the market and this sends the price up, even generating a huge gap. 70 00:04:18,640 --> 00:04:22,900 I personally don't avoid trading using the news as an input if the context 71 00:04:22,900 --> 00:04:25,240 suggests that an accumulation is possible. 72 00:04:25,820 --> 00:04:30,000 Of course, there will always be that additional risk that if you are wrong, 73 00:04:30,000 --> 00:04:33,380 loss could be greater than that established by your original stop loss. 74 00:04:33,800 --> 00:04:36,040 for the same reason we see illustrated here. 75 00:04:36,700 --> 00:04:41,980 If the market opens with a gap below, instead of opening above, your stop loss 76 00:04:41,980 --> 00:04:47,340 would be executed at that opening price below, considerably increasing the loss. 77 00:04:47,900 --> 00:04:52,940 Moving on, we are now going to look at the next key issue, which has to do with 78 00:04:52,940 --> 00:04:53,940 the nature of trade. 79 00:04:54,260 --> 00:04:58,460 We often think that the position we are about to open is the one that will make 80 00:04:58,460 --> 00:04:59,419 us rich. 81 00:04:59,420 --> 00:05:01,700 We start looking at longer time frames. 82 00:05:02,090 --> 00:05:05,750 with the aim of turning that trade that was the result of a short -term analysis 83 00:05:05,750 --> 00:05:08,910 into one that is going to look for major long -term movement. 84 00:05:09,210 --> 00:05:14,390 Of course, 90 % of the time, this will not happen. And the worst thing is that 85 00:05:14,390 --> 00:05:18,930 it could be a good trade, but we lost out on obtaining more profits from it by 86 00:05:18,930 --> 00:05:20,730 not properly managing the time frame. 87 00:05:21,390 --> 00:05:25,130 The trade should always be managed in accordance with the trading time frame. 88 00:05:25,650 --> 00:05:29,490 Don't expect trades that were born in the short term to become major trends. 89 00:05:30,030 --> 00:05:34,730 Although it is true that on occasion this could happen, usually it is not the 90 00:05:34,730 --> 00:05:37,970 case. This chart shows an example of this concept. 91 00:05:38,450 --> 00:05:42,690 Assuming we have managed to enter at that spring, we need to manage the 92 00:05:42,690 --> 00:05:46,490 in this time frame and use the liquidity zones that most immediately appear. 93 00:05:47,350 --> 00:05:51,730 The liquidity zone that we see in the upper part, if we make use of 94 00:05:51,910 --> 00:05:57,070 undoubtedly corresponds to a price pivot in a longer term time frame, so that 95 00:05:57,070 --> 00:05:58,610 should not be our priority target. 96 00:05:59,180 --> 00:06:03,060 It would not make sense to enter that accumulation and wait for that very 97 00:06:03,060 --> 00:06:06,140 distant liquidity zone as our first profit -taking opportunity. 98 00:06:06,980 --> 00:06:11,340 Could the price even reach it? Of course it could. And perhaps we should place 99 00:06:11,340 --> 00:06:14,820 some of our position in the hope that the market reaches that more ambitious 100 00:06:14,820 --> 00:06:15,820 target zone. 101 00:06:15,940 --> 00:06:20,200 But before getting there, the price must pass through other zones that could 102 00:06:20,200 --> 00:06:21,600 generate a change of control. 103 00:06:21,980 --> 00:06:25,660 And these zones are the ones we should use for our position management. 104 00:06:26,500 --> 00:06:28,300 Be very careful with this. 105 00:06:28,600 --> 00:06:31,940 because it is something that happens frequently, especially among beginners. 106 00:06:32,380 --> 00:06:36,160 The closing price of a candlestick is one of the most important pieces of 107 00:06:36,160 --> 00:06:40,480 information, telling us about the commitment and quality of the traders 108 00:06:40,480 --> 00:06:41,520 entered in that direction. 109 00:06:42,300 --> 00:06:46,120 Don't try to anticipate your entry, because you will expose yourself to 110 00:06:46,120 --> 00:06:47,120 unnecessary risk. 111 00:06:48,100 --> 00:06:51,220 Imagine we are in the trading zone awaiting our entry trigger. 112 00:06:51,620 --> 00:06:54,380 Let's assume it is a candlestick showing intent. 113 00:06:55,100 --> 00:06:59,060 Then we see a candlestick that at first glance seems to have the characteristics 114 00:06:59,060 --> 00:07:00,100 we are looking for. 115 00:07:00,320 --> 00:07:05,240 But before the candlestick ends and closes according to its time frame, we 116 00:07:05,240 --> 00:07:08,160 decide to enter in an attempt to anticipate the entry. 117 00:07:08,560 --> 00:07:13,380 And surprise, surprise, just before the candlestick closes, a minor imbalance 118 00:07:13,380 --> 00:07:17,740 occurs in the opposite direction indicating exactly the opposite 119 00:07:17,740 --> 00:07:18,740 were looking for. 120 00:07:18,880 --> 00:07:20,760 You may think this can't happen. 121 00:07:20,990 --> 00:07:24,770 but I assure you that the sentiment of the candlestick can change in seconds or 122 00:07:24,770 --> 00:07:29,210 minutes. We do not know what type of information is about to be released to 123 00:07:29,210 --> 00:07:34,210 market, or if it will be before, or after, or how the market itself will 124 00:07:35,190 --> 00:07:39,670 That is why it is essential to wait for the closing price, since it allows us to 125 00:07:39,670 --> 00:07:42,170 determine the sentiment of that particular candlestick. 126 00:07:42,890 --> 00:07:45,610 Sometimes, you might enter the market in the wrong manner. 127 00:07:46,240 --> 00:07:50,100 perhaps in the way described in the above example, when trying to anticipate 128 00:07:50,100 --> 00:07:51,039 your entry. 129 00:07:51,040 --> 00:07:52,040 What do we do then? 130 00:07:52,620 --> 00:07:54,140 Close the trade immediately. 131 00:07:55,180 --> 00:07:57,640 Abandoning the position is the most advisable measure. 132 00:07:58,200 --> 00:08:02,120 You have not followed your trading plan. It is not a trade that offers any 133 00:08:02,120 --> 00:08:06,600 guarantees or confidence, so there is no point staying in it, hoping that the 134 00:08:06,600 --> 00:08:07,860 market will go in our favor. 135 00:08:08,440 --> 00:08:13,040 When it comes to the market, we must put our feelings aside and act as coldly as 136 00:08:13,040 --> 00:08:16,720 possible. And in this situation, there can be no excuses. 137 00:08:17,240 --> 00:08:19,880 Accept your mistake and close your position. 138 00:08:20,580 --> 00:08:25,520 The example seen previously is just one type of bad entry, but there are plenty 139 00:08:25,520 --> 00:08:26,439 of others. 140 00:08:26,440 --> 00:08:30,600 For example, that instead of buying, you have placed a sell order. 141 00:08:30,960 --> 00:08:33,480 That instead of one unit, you have bought 10. 142 00:08:34,140 --> 00:08:38,020 That you are looking at the wrong asset even, especially if you are managing 143 00:08:38,020 --> 00:08:41,659 several in your follow -up list, that you make a mistake in the type of order 144 00:08:41,659 --> 00:08:43,440 and you have entered with a buy limit. 145 00:08:43,720 --> 00:08:47,800 instead of a buy stop, to buy at the break of the trigger candlestick. 146 00:08:48,100 --> 00:08:52,400 You might even apply the wrong strategy, realizing later that your analysis of 147 00:08:52,400 --> 00:08:55,240 the roadmap was wrong and you have entered the wrong side. 148 00:08:55,980 --> 00:08:59,500 These are just a few examples, but the possibilities are endless. 149 00:08:59,820 --> 00:09:03,980 If you realize you have made a mistake, the key is to try to correct it as soon 150 00:09:03,980 --> 00:09:06,680 as possible, even if it means taking a loss. 151 00:09:07,340 --> 00:09:09,900 Don't let the market reward you for a poor performance. 152 00:09:10,460 --> 00:09:13,080 Trades can be good or bad regardless of the result. 153 00:09:13,740 --> 00:09:17,440 If you do everything right, if you follow your trading plan and execute 154 00:09:17,440 --> 00:09:22,160 everything as established, but still the trade has a negative result, the trade 155 00:09:22,160 --> 00:09:25,880 is still a good trade, because you have done everything you had to do. 156 00:09:26,360 --> 00:09:30,860 The negative result is only due to the inherent variability of the markets and 157 00:09:30,860 --> 00:09:32,840 of the result. This shouldn't worry you. 158 00:09:33,380 --> 00:09:37,420 What should worry you is a positive trade having carried out poor 159 00:09:39,240 --> 00:09:43,400 These types of trades are bad because on this occasion, it may have gone well 160 00:09:43,400 --> 00:09:46,280 for you, but the next time, it almost certainly won't. 161 00:09:46,520 --> 00:09:51,160 And if you have been rewarded even after doing your job badly, you are not going 162 00:09:51,160 --> 00:09:54,540 to correct your mistakes and your learning process will be all wrong. 163 00:09:55,000 --> 00:09:59,400 It is critical to realize that doing things badly is not profitable in the 164 00:09:59,400 --> 00:10:05,360 term. Doing things well is, even if that means that in the short term, you have 165 00:10:05,360 --> 00:10:06,360 to accept a loss. 166 00:10:07,100 --> 00:10:11,060 Assuming we have done everything correctly and we are already in a 167 00:10:11,360 --> 00:10:16,300 situations will continue to appear that should set the alarm bells ringing and 168 00:10:16,300 --> 00:10:18,040 make us consider an early exit. 169 00:10:18,540 --> 00:10:22,900 Once our order is triggered, if we enter the market and see that the market is 170 00:10:22,900 --> 00:10:26,780 not moving in our direction, but starts to fluctuate up and down without any 171 00:10:26,780 --> 00:10:31,840 clear direction, or simply goes against us, this may be a sign that the market 172 00:10:31,840 --> 00:10:34,700 is not yet ready to initiate the movement that we are expecting. 173 00:10:36,610 --> 00:10:40,090 Objectively, what we see is that the momentum that we expect the market to 174 00:10:40,090 --> 00:10:42,870 after the appearance of our trigger has not taken place. 175 00:10:43,250 --> 00:10:47,810 And therefore, after a while, without seeing this reaction, this would suggest 176 00:10:47,810 --> 00:10:50,910 that there is a good chance the price will hit the stop of the trigger 177 00:10:50,910 --> 00:10:55,250 candlestick. In this case, you might want to think about reducing your risk 178 00:10:55,250 --> 00:10:57,430 exposure before the stop loss closes everything. 179 00:10:58,110 --> 00:11:01,450 You will never know to what extent you are making a good decision. 180 00:11:01,870 --> 00:11:05,090 But if for whatever reason you don't feel comfortable with the trade you have 181 00:11:05,090 --> 00:11:07,440 open, you can close a percentage of it. 182 00:11:07,720 --> 00:11:10,380 This may be a good way to remain emotionally calm. 183 00:11:10,960 --> 00:11:15,260 Bear in mind that you can always re -enter later, if the market sends out 184 00:11:15,260 --> 00:11:16,260 signals. 185 00:11:16,860 --> 00:11:21,540 In the example on the slide, we see a potential spring in a bullish uptrend 186 00:11:21,540 --> 00:11:25,860 breaking through two previous lows and creating a candlestick that we could 187 00:11:25,860 --> 00:11:27,080 used as an entry trigger. 188 00:11:27,860 --> 00:11:32,240 The next candlestick activates the order and automatically goes against us. 189 00:11:32,560 --> 00:11:36,570 At that point, We have already confirmed that the momentum that we needed to 190 00:11:36,570 --> 00:11:40,130 take place after the appearance of the trigger candlestick has not happened. 191 00:11:40,630 --> 00:11:44,230 So, there is an increased chance that the market will have to carry out a new 192 00:11:44,230 --> 00:11:47,550 test at the lows to assess the commitment towards the short side. 193 00:11:47,870 --> 00:11:51,650 In this case, it is a very light test that barely breaks the lows of the 194 00:11:51,650 --> 00:11:55,810 previous pivot, but it could have fallen a lot more and triggered the stop loss. 195 00:11:56,410 --> 00:12:00,730 Another situation in which we should exit early is when we observe a volume 196 00:12:00,730 --> 00:12:02,810 that continues going against our positioning. 197 00:12:03,460 --> 00:12:07,620 Imagine that we have entered that false breakout that takes place on the lows of 198 00:12:07,620 --> 00:12:11,880 that structure, and that in the middle of our trade we observe an unusual peak 199 00:12:11,880 --> 00:12:13,780 in volume with a clear bearish sentiment. 200 00:12:14,660 --> 00:12:18,940 Until the appearance of that event, if we have not done any type of position 201 00:12:18,940 --> 00:12:23,980 management, this is an input significant enough to at least protect it by 202 00:12:23,980 --> 00:12:28,300 placing the stop loss at the entry point, so that if the market continues 203 00:12:28,300 --> 00:12:32,320 fall later, we don't take a hit, as was the case in this example. 204 00:12:33,260 --> 00:12:37,560 More important than the volume itself is the price reaction to that volume. 205 00:12:38,280 --> 00:12:43,200 If the same volume peak had generated a bullish candlestick, our interest would 206 00:12:43,200 --> 00:12:47,440 not be affected initially, at least until seeing the subsequent price 207 00:12:48,380 --> 00:12:53,140 This is exactly the same concept as that of climactic volume at the breakout. 208 00:12:53,760 --> 00:12:57,560 We will always want to be on the right side of the last volume peak. 209 00:12:57,760 --> 00:13:01,960 Anything different to this, and we should consider carrying out some form 210 00:13:01,960 --> 00:13:02,960 position management. 211 00:13:03,210 --> 00:13:06,770 And finally, we are going to deal with the situation where we see a strong 212 00:13:06,770 --> 00:13:08,230 movement against our position. 213 00:13:09,090 --> 00:13:13,430 Imagine we are in this uptrend context and we see an opportunity in that false 214 00:13:13,430 --> 00:13:14,850 breakout at the previous low. 215 00:13:15,490 --> 00:13:19,790 The market begins to move in our favor at some point and it generates a strong 216 00:13:19,790 --> 00:13:21,710 downward movement for no apparent reason. 217 00:13:22,590 --> 00:13:26,750 Since at this point where that bearish candlestick develops, it is highly 218 00:13:26,750 --> 00:13:30,210 that the move to lower prices will continue, we should do some management. 219 00:13:31,240 --> 00:13:35,620 In this case, it might be advisable to use a stop loss below the low of said 220 00:13:35,620 --> 00:13:40,040 candlestick, just as we learned with the concept of the mental stop loss when a 221 00:13:40,040 --> 00:13:41,940 strong re -entry into the range occurs. 222 00:13:42,920 --> 00:13:44,220 Why this kind of stop? 223 00:13:44,480 --> 00:13:48,960 Well, because it could be the start of a possible shakeout and reverse upwards 224 00:13:48,960 --> 00:13:51,440 in the next candlestick, as previously happened. 225 00:13:52,120 --> 00:13:55,600 Then it would be a matter of moving the original stop loss below that 226 00:13:55,600 --> 00:13:57,860 candlestick to cover two possible situations. 227 00:13:58,730 --> 00:14:03,170 In the event the market continues to fall, as it did in this example, we cut 228 00:14:03,170 --> 00:14:07,490 losses. And at the same time, we leave open the scenario of yet another false 229 00:14:07,490 --> 00:14:09,690 breakout prior to the price moving higher again. 230 00:14:10,350 --> 00:14:13,670 This is the best type of management for either of the two scenarios. 231 00:14:14,510 --> 00:14:17,850 When we open a position, we have several ways of managing it. 232 00:14:18,090 --> 00:14:20,590 And in reality, one way is no better than another. 233 00:14:21,310 --> 00:14:24,550 Here we are referring to how we are going to distribute the amount that we 234 00:14:24,550 --> 00:14:25,650 allocated to that position. 235 00:14:26,200 --> 00:14:28,500 from both the point of view of the entry and exit. 236 00:14:28,860 --> 00:14:33,520 With the type of all or nothing management we define the entry, stop 237 00:14:33,520 --> 00:14:34,520 take profit points. 238 00:14:34,940 --> 00:14:38,960 We enter with a full position amount and allow it to develop until it reaches 239 00:14:38,960 --> 00:14:42,880 the stop loss or take profit level without doing any additional management. 240 00:14:43,660 --> 00:14:48,140 The main advantage of this style is that the trader in no case has to manipulate 241 00:14:48,140 --> 00:14:52,700 the position, avoiding the possibility of making bad decisions, guided by 242 00:14:52,700 --> 00:14:54,400 feelings such as fear or greed. 243 00:14:55,210 --> 00:14:59,050 But this is a double -edged sword because it is also its biggest 244 00:14:59,690 --> 00:15:04,430 By not being aware of what is happening in the market, we may indirectly assume 245 00:15:04,430 --> 00:15:09,150 a greater risk, because we will not act even if our analysis suggests that the 246 00:15:09,150 --> 00:15:10,490 market sentiment could change. 247 00:15:11,150 --> 00:15:14,290 An example of this type of trade can be seen in this chart. 248 00:15:14,510 --> 00:15:16,830 We set up the orders and let the price develop. 249 00:15:17,370 --> 00:15:21,530 Many traders, myself included, feel comfortable taking partial profits. 250 00:15:22,120 --> 00:15:26,060 This simply means, once the market has advanced in our position and we have 251 00:15:26,060 --> 00:15:30,320 obtained certain latent profits, closing part of the position and securing these 252 00:15:30,320 --> 00:15:32,880 profits when the price reaches some key trading zone. 253 00:15:33,560 --> 00:15:38,160 The market is an environment full of uncertainty, and it is constantly 254 00:15:38,160 --> 00:15:42,200 in its very nature, so we need to be able to analyze and interpret the 255 00:15:42,200 --> 00:15:46,120 information offered to us very quickly in order to make decisions that improve 256 00:15:46,120 --> 00:15:47,120 our risk management. 257 00:15:47,700 --> 00:15:50,260 There are several ways of taking partial profits. 258 00:15:50,730 --> 00:15:54,930 A simple way to do this is to divide the size of the position into two parts, 259 00:15:55,110 --> 00:15:59,830 allocating the first part to the first take profit, and a second and last part 260 00:15:59,830 --> 00:16:02,510 of the position allocated to some distant trading level. 261 00:16:03,010 --> 00:16:08,270 In this case, we would be talking about taking profit 1 and taking profit 2 due 262 00:16:08,270 --> 00:16:09,550 to the two closing positions. 263 00:16:10,590 --> 00:16:15,730 One thing you can decide is how to divide the position size, that is, what 264 00:16:15,730 --> 00:16:18,830 percentage of the position to allocate to each of the take profits. 265 00:16:19,760 --> 00:16:25,660 You may choose 50 % for each take profit, or 60 -40, 70 -30, etc. 266 00:16:26,600 --> 00:16:30,260 Generally, the first part of the position is usually allocated a higher 267 00:16:30,260 --> 00:16:35,240 percentage. If you plan on taking partial profits, I recommend allocating 268 00:16:35,240 --> 00:16:37,740 least half the position to the first take profit. 269 00:16:38,600 --> 00:16:42,340 But maybe you want to split the position into three parts instead of two. 270 00:16:42,860 --> 00:16:45,240 This is also another widely used practice. 271 00:16:45,640 --> 00:16:50,480 For example, We allocate 50 % of the total position size to the first take 272 00:16:50,480 --> 00:16:54,400 profit. Then we will leave another 40 % for a second take profit. 273 00:16:54,600 --> 00:16:59,160 And finally, since this third part is more complicated to achieve, we can 274 00:16:59,160 --> 00:17:03,220 the remaining 10 % in the event the market is very unbalanced in one 275 00:17:03,220 --> 00:17:06,300 and not many movements take place in the opposite direction. 276 00:17:06,560 --> 00:17:10,660 As well as taking a partial profit, the trader in this case will protect the 277 00:17:10,660 --> 00:17:12,140 position at the break -even level. 278 00:17:13,119 --> 00:17:17,140 Psychologically, It is very reassuring to know that for the rest of the 279 00:17:17,140 --> 00:17:21,599 you will no longer be able to incur any losses and that also, whatever happens, 280 00:17:21,839 --> 00:17:25,440 you will close the position in the black thanks to the profits that you have 281 00:17:25,440 --> 00:17:26,440 already secured. 282 00:17:26,880 --> 00:17:30,620 As we can see, this is another example highlighting how diverse the 283 00:17:30,620 --> 00:17:31,620 possibilities are. 284 00:17:32,040 --> 00:17:34,300 You can include the break -even or not. 285 00:17:34,620 --> 00:17:36,700 Nothing is written in stone in this regard. 286 00:17:37,020 --> 00:17:40,620 But if you are in front of a screen and you are able to actively manage your 287 00:17:40,620 --> 00:17:43,300 trading more, I highly recommend you do so. 288 00:17:44,200 --> 00:17:48,580 This term describes the action of relocating the stop loss level by moving 289 00:17:48,580 --> 00:17:49,900 the level of the entry price. 290 00:17:50,400 --> 00:17:55,180 With this, we can protect the position so that if the price reaches this level, 291 00:17:55,300 --> 00:17:57,780 we exit the market without losses or gains. 292 00:17:58,460 --> 00:18:02,680 Bear in mind that in order for us to exit the market with a net result of 293 00:18:02,900 --> 00:18:06,980 we must make sure that we factor in all the different fees we have to pay. 294 00:18:07,360 --> 00:18:12,120 As a result, it is common practice to take the stop loss slightly behind the 295 00:18:12,120 --> 00:18:13,120 entry level. 296 00:18:13,390 --> 00:18:18,110 The key question here is, when is the right time to put the stop loss at break 297 00:18:18,110 --> 00:18:22,330 -even? As always, this will depend on the trader and their strategy. 298 00:18:22,850 --> 00:18:25,450 I recommend doing it in two situations. 299 00:18:25,910 --> 00:18:31,390 One, after the first take profit is reached, because at that point the 300 00:18:31,390 --> 00:18:34,470 will have reached a liquidity zone and we should protect ourselves. 301 00:18:35,190 --> 00:18:39,650 Two, when a certain imbalance or event occurs in the market that suggests a 302 00:18:39,650 --> 00:18:42,390 change in sentiment that goes against our position. 303 00:18:43,000 --> 00:18:46,780 For this reason, it is important that you are proactive when managing your 304 00:18:46,780 --> 00:18:47,780 position. 305 00:18:48,600 --> 00:18:53,020 This chart would be an example of the first scenario, where we would modify 306 00:18:53,020 --> 00:18:55,860 stop loss location upon reaching the first liquidity zone. 307 00:18:56,540 --> 00:19:00,720 And this second example corresponds to the second scenario, where we would 308 00:19:00,720 --> 00:19:04,600 modify the original stop loss when an event appears that could change the 309 00:19:04,600 --> 00:19:09,220 sentiment, such as that peak in volume and the bearish continuation of the 310 00:19:09,220 --> 00:19:11,920 price, an example that we have already seen before. 311 00:19:13,160 --> 00:19:17,340 In this situation, the trade would lead to a profit for the first part of the 312 00:19:17,340 --> 00:19:21,780 position and a break -even for the second part, since the stop loss was 313 00:19:21,780 --> 00:19:25,680 triggered before the price could reach the second take profit located at the 314 00:19:25,680 --> 00:19:26,680 maximum pivot. 315 00:19:27,240 --> 00:19:31,380 This type of management is very useful since it adapts to any new information 316 00:19:31,380 --> 00:19:35,120 that is being incorporated into the market, which we should be actively 317 00:19:35,120 --> 00:19:39,940 identifying. A double entry means entering the market at different prices, 318 00:19:39,940 --> 00:19:40,980 different trading situations. 319 00:19:41,950 --> 00:19:46,190 And depending on how the second entry is carried out, whether it is done at a 320 00:19:46,190 --> 00:19:50,250 better or worse price than the first entry is known as averaging or 321 00:19:50,650 --> 00:19:54,910 With the averaging method, we divide the entire position into different packages 322 00:19:54,910 --> 00:19:59,650 and make different entries until it is complete, but always subject to the 323 00:19:59,650 --> 00:20:01,330 context and the strategy of the trade. 324 00:20:02,270 --> 00:20:06,310 Let's say you want to buy an asset, but it isn't at the optimal point for you to 325 00:20:06,310 --> 00:20:10,690 enter. That even though it is in a trading zone, it is feasible that it may 326 00:20:10,690 --> 00:20:11,690 down even further. 327 00:20:11,920 --> 00:20:15,180 given the proportionality of its movements or for some other reason. 328 00:20:15,600 --> 00:20:18,840 But of course, at the same time, you are afraid that the market will leave you 329 00:20:18,840 --> 00:20:22,920 behind, that it will initiate the movement you have forecast, and that it 330 00:20:22,920 --> 00:20:26,240 not visit that trading zone which offers you the best chance of entry. 331 00:20:26,700 --> 00:20:30,200 Well, one way to solve this would be to enter at that first trading level, 332 00:20:30,320 --> 00:20:34,660 assuming it offers the entry trigger with a part of your position, and leave 333 00:20:34,660 --> 00:20:38,440 another part aside in case the scenario in which it reaches the trading zone at 334 00:20:38,440 --> 00:20:40,300 the lower prices finally comes to pass. 335 00:20:40,830 --> 00:20:43,690 re -entering there when it offers us a new entry signal. 336 00:20:44,450 --> 00:20:46,410 This chart shows an example of this. 337 00:20:46,650 --> 00:20:50,770 We already know that our job is to identify all possible trading zones that 338 00:20:50,770 --> 00:20:51,770 price could visit. 339 00:20:52,150 --> 00:20:56,350 In this example, we see that after the bullets break out, we have two potential 340 00:20:56,350 --> 00:21:01,110 levels, that of the upthrust action and the high that establishes the AR. 341 00:21:02,030 --> 00:21:06,070 If the market offers us an entry trigger into the first, since we know it could 342 00:21:06,070 --> 00:21:10,280 still reach the second trading zone as well, we could allocate 50 % of the 343 00:21:10,280 --> 00:21:11,940 position size to each of these. 344 00:21:12,220 --> 00:21:16,000 In this way, we would enter with half the position at the first entry trigger 345 00:21:16,000 --> 00:21:20,920 and with the rest only in the event that a possible entry opens up in the second 346 00:21:20,920 --> 00:21:21,920 trading zone. 347 00:21:22,140 --> 00:21:25,900 Our biggest problem would be if our entry trigger doesn't appear in the 348 00:21:25,900 --> 00:21:30,640 trading zone and instead the price re -enters the range again, meaning all 349 00:21:30,640 --> 00:21:32,240 movement was just a false breakout. 350 00:21:32,500 --> 00:21:37,160 In that case, we should have previously established the maximum zone or level 351 00:21:37,470 --> 00:21:39,330 where we would allow the price to re -enter. 352 00:21:39,710 --> 00:21:43,170 At that point, we would close the position without hesitation. 353 00:21:44,010 --> 00:21:47,510 For this, we know that we could place the stop loss in the middle of the 354 00:21:47,510 --> 00:21:51,610 structure as the worst case scenario and even apply the reasoning for a mental 355 00:21:51,610 --> 00:21:54,790 stop loss in the event that it re -enters the range with force. 356 00:21:56,010 --> 00:22:00,830 If you look closely, the entry level for both scenarios is practically the same. 357 00:22:01,070 --> 00:22:04,750 So in this case, we would not be able to take advantage of the entry at a better 358 00:22:04,750 --> 00:22:06,630 price. This can happen. 359 00:22:07,050 --> 00:22:09,610 it will be determined by the very nature of the market. 360 00:22:09,830 --> 00:22:14,650 At the same time, it is important to point out that, given the proximity 361 00:22:14,650 --> 00:22:18,910 the entry level and that of the first liquidity zone, in this case, I 362 00:22:18,910 --> 00:22:22,970 tend to take profits, but I would modify the stop loss to place it at break 363 00:22:22,970 --> 00:22:23,970 -even. 364 00:22:24,450 --> 00:22:28,470 Pyramiding involves the opposite approach with regard to location of the 365 00:22:28,470 --> 00:22:32,630 levels. Let's suppose that we are at the final possible trading zone, waiting 366 00:22:32,630 --> 00:22:35,010 for the entry trigger indicated by our trading approach. 367 00:22:35,630 --> 00:22:38,770 but for whatever reason we do not feel as confident as we would like. 368 00:22:39,250 --> 00:22:43,250 If the signal finally appears, we could enter the market with part of the total 369 00:22:43,250 --> 00:22:47,150 position and, unless the price goes in our favor, not enter it again. 370 00:22:48,010 --> 00:22:51,990 To do this, we would have previously identified the trading zones and planned 371 00:22:51,990 --> 00:22:52,990 our possible scenarios. 372 00:22:53,270 --> 00:22:57,390 For our second entry, we would wait for the price to position itself in favor of 373 00:22:57,390 --> 00:22:59,990 a new trading zone, or one previously identified. 374 00:23:00,530 --> 00:23:03,770 At that point, we would execute our entry signal again. 375 00:23:04,010 --> 00:23:06,920 At that moment, we would have used the entire position. 376 00:23:07,700 --> 00:23:10,040 This is exactly what happens in this example. 377 00:23:10,640 --> 00:23:15,000 After seeing that distribution pattern, the initial scenario does not offer us 378 00:23:15,000 --> 00:23:19,220 many guarantees, so if we see our trigger, either we do not take the 379 00:23:19,220 --> 00:23:23,700 and wait for a more favorable situation, or we only use part of it. This would 380 00:23:23,700 --> 00:23:24,760 be the more aggressive trade. 381 00:23:25,560 --> 00:23:28,980 Assuming we had taken the position, the middle level of the distribution 382 00:23:28,980 --> 00:23:32,940 structure should have been used for the take profit for that first entry, total 383 00:23:32,940 --> 00:23:33,940 or partial. 384 00:23:34,100 --> 00:23:38,340 And then, we see how the price generates a test on the low of the minor 385 00:23:38,340 --> 00:23:42,940 structure, which, in essence, would act as a spring test, so any entry 386 00:23:42,940 --> 00:23:44,540 opportunity there should be taken. 387 00:23:44,860 --> 00:23:48,220 At that point, we would have already taken the two parts of the initial 388 00:23:48,220 --> 00:23:49,220 position. 389 00:23:49,300 --> 00:23:53,280 We would have a second take -profit opportunity for this trade at the high 390 00:23:53,280 --> 00:23:54,259 this structure. 391 00:23:54,260 --> 00:23:57,700 From there, since the general context is determined by the accumulation 392 00:23:57,700 --> 00:24:01,880 structure below, it would not be unreasonable to set aside a third of the 393 00:24:01,880 --> 00:24:06,020 position to try to take advantage of a greater effect of the entire cause that 394 00:24:06,020 --> 00:24:07,020 has been built. 395 00:24:07,720 --> 00:24:11,620 The main advantage of this approach is that it reduces risk in the event the 396 00:24:11,620 --> 00:24:13,000 first trade results in a loss. 397 00:24:13,500 --> 00:24:18,360 If we enter in the last zone and the price reaches our stop -loss level, the 398 00:24:18,360 --> 00:24:20,580 loss will not be for the entire position. 399 00:24:20,860 --> 00:24:23,000 It will only be for that first part. 400 00:24:23,550 --> 00:24:27,410 However, the main disadvantage is that you will obtain lower profits if the 401 00:24:27,410 --> 00:24:31,290 trade eventually turns out to be a winner, since for the second part, you 402 00:24:31,290 --> 00:24:32,390 have entered at a worse price. 403 00:24:32,930 --> 00:24:37,430 The work dynamic in all trades will be exactly the same. When the price reaches 404 00:24:37,430 --> 00:24:41,510 a trading zone, a liquidity zone, we will always implement some type of 405 00:24:41,510 --> 00:24:45,770 management, either close the entire position taking profits, taking a 406 00:24:45,770 --> 00:24:49,990 profit and protecting the rest, or at least moving the stop loss to break even 407 00:24:49,990 --> 00:24:52,910 and protecting the position if we do not want to take any profit. 408 00:24:53,290 --> 00:24:57,130 as we saw in one of the previous examples, because the entry price and 409 00:24:57,130 --> 00:24:59,210 position management zone are too close. 410 00:24:59,950 --> 00:25:04,090 This is also the case when we see any behavior that goes against our interests 411 00:25:04,090 --> 00:25:06,210 that suggests that the market could turn. 412 00:25:06,750 --> 00:25:11,630 At that point, you may or may not want to take profit, but at the very least, 413 00:25:11,690 --> 00:25:12,990 you should protect the position. 414 00:25:13,470 --> 00:25:18,550 The key, as I already say, is to maintain a defensive attitude, always 415 00:25:18,550 --> 00:25:20,890 prioritizing the preservation of capital.