In Van Tharp's well received book "Trade Your Way to Financial Freedom", chapter 10 is "How to Take Profits". Under What To Avoid, he is adamantly against scaling out profits with multiple exits. He claims it goes against cutting losses short and letting your profits run and it results in large losses and small profits. He says you are taking the maximum loss on all contracts but taking maximum profits on just a fraction of the contracts.
It does make some sense, but contradicts most other trading books I've read.
Tharp favors exiting all at once, perhaps with a "profit retracement" type stop based on the amount of initial risk and tightening it as the trade moves in your favor. Or, exiting all at once with a ATR based stop.
NinjaTrader obviously allows multiple levels, fixed, trailing, etc.
It would be helpful to hear from traders who used both profit taking strategies in a live environment or from those who have backtested both methods.
Thanks,
Brooks
It does make some sense, but contradicts most other trading books I've read.
Tharp favors exiting all at once, perhaps with a "profit retracement" type stop based on the amount of initial risk and tightening it as the trade moves in your favor. Or, exiting all at once with a ATR based stop.
NinjaTrader obviously allows multiple levels, fixed, trailing, etc.
It would be helpful to hear from traders who used both profit taking strategies in a live environment or from those who have backtested both methods.
Thanks,
Brooks
