Strategies in Trading: Exiting a Position Is More Important?

In trading, as in investing, there are many strategies that can be used to try to gain an advantage over the market and thus make a profit. One of these is to focus on exiting a position, i.e. closing it.

In fact, you could say that there are two things you can actually influence: opening and closing a position. Everything else that happens is beyond your control. And these two factors determine whether you make a profit or a loss.

Traders use many strategies in their tradings?

Many experienced traders say that even the moment of entry is not as important as the moment at which we close a given transaction. How much truth is there in these strategies? It is difficult to say because it is not easy to get hold of the financial data of individual market players, so we do not know if they really make money from it. And if so, do they achieve such results in the long term?

In general, it is very difficult to get reliable results from traders. One thing is certain: most of them lose. Those who publish their results usually want to sell their services (e.g. training). The reliability of these results can vary, because the fact that they earned money in a certain period does not mean that they will continue to earn money in the future.

When do we demonstrate our statements?

Those who have achieved a major success also boast about their results. However, it is often the case that these people have, for example, achieved a good result on a demo account. And such an account, as you can imagine, is not very reliable because playing on a demo account is not accompanied by the same emotions as on a real account, when you risk your own money in every position.

Why is exiting so important? It’s simple. It is this decision that determines whether we make a profit on a given trade. Often, in the case of losing positions, we delay the decision to close and the losses accumulate. A similar problem can occur with profitable transactions, when we want to get the most out of a position. And the chart suddenly turns around and eats up our paper profit. That is why it is so important to have a strategy before entering into a transaction and to be consistent in implementing it.

When it comes to opening a trade, we often hear that it doesn’t really matter at what point we open it, because the chart is moving all the time, so if we have a set starting point, the entry doesn’t really matter.

Read also: What have I learned after 15 years in the market?

These theories or strategies can, of course, be disputed, because everyone makes decisions based on the knowledge they have. Unfortunately, in real life, we encounter many arguments between traders who prioritize their strategy over others. I have been in the market for many years and when I see such disputes, I wonder if they are not caused by the fact that having open positions we are exposed to emotions. And when our position goes in the opposite direction to what we intended, we are simply nervous, which causes disputes.

I have never convinced anyone of my strategy and I am not going to do so because just because something works for a year, it does not mean it will work the following year. So why argue about who is right? The market verifies everything. Always.