TRADE

MANAGEMENT
Tutorial By - EmperorBTC
 Trade Management
Dear Friends.

After years of trading I have realized that TA, charting all have their places.
But managing a trade, whether actively or passively is the way you survive in all
circumstances.

Where you're an algo or discretionary trader, trade management is what will keep you
alive.

The topics dealt with in the PDF are aimed at actively managing a trade after entering it
and the trades to avoid based on certain events.

How you manage trades eventually is a personal style decision but this PDF will work as
a solid framework in building a habit of managing the trades.

All the best and please read it with enough time and attention.
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There’s a multitude of factors that play into trade management. It is very difficult to teach
trade management without knowing your system. We will keep in mind the tutorials we have
shared previously. The aim of the tutorial is to is illustrate the thought process while
managing trades rather than an exact step by step guide. Thus, you should focus on the
reasoning as well.

The 2 types of traders:

i) Discretionary Trader
ii) Systematic Trader
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A discretionary trader can manage trades and make decisions based on market conditions.
Trade management is much more important here. Constant monitoring of trades (suitable to
day trading) makes the most sense for a discretionary trader. A discretionary trader also
makes decisions such as not to trade certain market conditions even if trade opportunities
that fit his system present themselves.

Systematic trading is always essential for beginners, and you can move to adapt as per your
“discretion” later.
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Illustration 1: Deciding not to take a trade OR Getting
out early

If you zoom in, you notice a 3 touch level that was supposed to be an easy limit short.
However, price just front ran the order. Once your trade is 50% or more on its way to the
 Trade Management
target, that’s when you want to move stops to reduce risk or secure some profits. Since the
bid was never filled, price almost went to TP.

A decision is to be made now, can we still short this level? Short answer: We can, but we
probably shouldn’t.
After being front run, we see price reject again from the same zone, then finding support
higher up. This should automatically make you think you shouldn’t take the trade.
Let’s say you still decide that the level is good enough to short and take the trade, in
hindsight, we see you were wrong.

Is there a way to have gotten out of the trade without taking the full loss? Yes.

Trade Management.
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Once you see price flip the level as support, trade idea is already invalidated. There is no point
in holding it till stop. In this case, you get out for near Breakeven (BE). This is how you
minimize the loss on your losing trades.
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Takeaway: Never panic and exit the moment price goes the opposite way. Make sure you
understand when your trade idea is invalidated, get out the moment it is, not before, not
after.
How to consider pulling orders (think of it as how to know if it is a true front run and your
level worked)?
Using the ATR: If the ATR value exceeds the difference between your order and the wick. It
might be time to start considering cancelling your bids.
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Illustration 2: Where to place your stops?
ATR trick for placing stops when trading an SFP. Use this in addition to the SFP tutorial.
Link: https://t.me/EmperorbtcTA/493

In choppy Price Action, we sometimes must wait for a sweep of a sweep (sort of like a 3 tap)
and can't enter because we might just get wicked out and obviously can't have a manual stop
because we can't position size accordingly.

So we can use the ATR to have a safety stop.

Settings need to be modified to 24 but just look at the ATR value of the "sweep" candle and
then place your stop that much above the high/low.
This allows you to position size properly.
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If a candle closes above your SFP high, of course you close manually, but this is the option to
not get stopped out on that one extra sweep while also having fixed invalidation.
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Illustration 3: When to get out early, Evolving R
concept.
Novice traders are fearful when they’re in profit (they want to bank profit as soon as possible)
and hopeful when they’re in the red (Unrealized loss makes them hope that the trade still
works out). Again, psychology is very important for trade management, you want to do the
inverse of novices.

Consider this
sample trade:
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In these scenarios, traders move their stops to entry and then sit on their hands hoping for 1
more R. The thinking is that it is a free trade now.

Evolving R is a concept that explains that your Risk:Reward ratio is always changing when
you’re in a position. Evolving R visualized for you.
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If you risked 2% on the trade, you’re up 6% and you’re now risking that 6% to make <2%
more. This is when you place a market order and get out while booking great profits.

Another important reason why evolving R is very important is because it gives you a
mathematical way to assess situations in trades. Otherwise, you're letting your emotions
make your decisions. I can easily work and
trade because my
emotions don't
make my decisions.
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When taking a trade, there’s a certain amount planning involved beyond just entry, target and
stop loss. Evolving R concept doesn’t mean you get out of all your trades early the moment
you’re in slight profit. When the trade seems to be slowly reversing on you and the evolving R
is less than 0.5, that’s when you START TO CONSIDER an early exit and securing profits.

Illustration for plan:

Black: keep holding your trade

Blue: Consider getting out or
securing some profit
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NOTE: When Price moves as illustrated in Black. You can choose to keep moving your stop
up. Example: Move stop to slightly below a level once it is flipped.

Things you should always keep in mind when taking a trade beyond, Entry, SL and TP are:
1) Trouble areas
2) Early Invalidation Areas
3) Trouble areas eliminated (levels flipped) to move stops.
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I hope this PDF helps you in understanding how to manage trades and you've at
least understood the basics of it.

If any doubt remains, you can comment about it on the tweet and I will answer
back.

I strongly suggest you to read the following for a greater clarification.

1. Risk Management : https://t.me/EmperorbtcTA/370

2. Level to Levels : https://t.me/EmperorbtcTA/527
3. Bias Formation : https://t.me/EmperorbtcTA/532
4. SFP : https://t.me/EmperorbtcTA/493

Love,
EmperorBTC