The most difficult part of trading and the hardest to master is the exit strategy. To be able to exit a trade successfully, consistently and profitably requires a flawless entry, a controlled and proven risk management system, lack of emotions, fearlessness and timing.
All these ingredients in a successful exit strategy require humans to not be themselves. By nature, we are risk adverse, emotional, fearful and we will never know if our timing is right. We will never know until its too over that we sold too early or sold too late. Even after taking the perfect entry, we lack the patience and discipline to manage the trade. We second guess ourselves, we try to control the market which we can’t control and we choose not to control our emotions which we are in total control of. The market is completely random by nature but we seem to think it is predictable.
Most people are living life day to day without a life plan. They have no idea what they are going to eat next, who they want to meet and where they want to go. The moment they start to trade they are asked to make a trading plan. How can they? They don’t know how to plan. They can’t even plan their lives how can they plan this trade? What’s harder to plan the depth of your life or the vastness of the market?
So for now, think about it for one moment. When you take an entry ask yourself, did you ever intend to exit the trade anyways? Did you really? Because if you did intend to exit you would have at least planned for the exit. Right? Don’t tell me you entered into the trade without planning the exit. Does this make sense?
And yes, trading without an exit plan is no different then jumping into the deep blue sea without the intention of going back up for air. Its suicide, unless. Unless, you never planned to exit the trade from the very beginning. And now you are living with all the consequences of your choice.
I will be the first and last person to remind you there simply is no perfect exit.