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I am learning to trade in trending secondary markets. I am usually able to find support price but I can't find resistance price using the previous data. I typically use S&R in previous data to predict current S&R but it doesn't really work for short-term trades.

If the chart is trending, where do I take profit? If if I do it too sooner, I might only earn half of what I would have got. If I do it too late, I might lose all the profit I could have gained. I just can't decide. I can't be in front of the screen all day long either to exit trade manually. Even if I am in front of screen, I sometime make mistakes because of FUD.

Right now, I use trailing SL. But I am looking for smarter strategies to decide targets in advance.

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Point & Figure charts are good for determining S&R because they filter out the noise. Varying the box size will depict shorter, intermediate and longer term S&R.

Trading is like getting on a bus ride without knowing how far the bus is going. What you want to do is go as far as you can and get off before or just after the destination is reached. Essentially, your question is asking, "How do I figure out how long the bus ride will be?". No one knows the answer since that occurs in the future.

To complicate matters, price action isn't a bus ride. It may zig zag back and forth on the way there with volatility forcing you out early.

You have several choices:

  • The most obvious is a trailing stop order. Set it too wide and you'll give back a lot of your profit. Set it too narrow and you may be prematurely stopped out, missing more of the move. Trial and error will give you a feel for what works as well as what you're comfortable with but it's never going to be perfect.

  • Book some profit if price momentum slows or reverses. The more it reverses, the faster you scale out.

  • Hedge with options (if available) to lock in profits

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  • Thank you for the answer. It exact describes me. I am a beginner but I thought more experienced people knows strategies to predict/guess targets with some accuracy. I will make sure learn P&F charts today. Thank you again. – PhilipFisher May 24 '20 at 15:30
  • Take a look at this – Bob Baerker May 24 '20 at 17:42

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