One big distinction between professional traders and retail traders is this:
Pros know their exit before they enter. Retail traders try to figure it out once the heat is on.
If you’ve ever felt stressed, uncertain, or emotionally tangled inside a trade, odds are your exit wasn’t defined. And without a defined exit, your mind fills the vacuum with emotions like fear, hope, hesitation, revenge, even justification.
Clarity of exits equals clarity of mind, which in turn equals consistency of results. Every clean trading day is built on this principle.
When you don’t know where you’ll exit, every second of the trade becomes a negotiation:
- “Should I take profits here?”
- “Should I just tighten the stop?”
- “Maybe I should let it run…”
- “Maybe it’ll come back…”
- “Maybe I’ll just wait one more candle…”
That internal debate is one cause of inconsistency.
Novice traders often underestimate how much mental bandwidth is wasted deciding mid-trade what they “should” do. Meanwhile, professional traders have already answered the question before the trade begins.
Here’s the rule: Never enter a trade without three numbers written down or anchored mentally:
- The initial stop - Where the setup is invalidated, not where “it would hurt,” but where the idea is wrong. This price is not a constant. It’s derived from a careful analysis of the present time chart and volatility.
- The profit target(s) - Where the market conditions (chart patterns/trend break, etc.) justify taking money off the table. Certainly, you can scale out of a position given enough size, creating multiple profit targets.
- The Update Point - A price level where you should reassess. You might alter your scaling out prices, adjust the trailing stop, exit completely, or cancel the scaling out and let it run.
These three anchors keep you disciplined when price starts moving fast.
Here’s what happens when you define your exits this way, in advance:
- Entries become easier
- Position size becomes obvious
- Emotions stay controlled
- Losses stay manageable
- Winners develop naturally
- Confidence stays intact
If you don’t know where you’re getting out, you’re not ready to get in. This is how you protect your confidence, your capital, and your long-term trading success.
To your trading success,
Mike Siewruk
PS: Was this advice helpful? Feel free to pass this link for a free membership to Trade Aptitude along to your trading buddies: thedailymarketforecast.com/signup