Selecting Suitable Entry Orders

Determining which kind of order to use for an entry would depend on the nature of the model that generates the entry signals, and the market logic that underpins it:

·         A limit order can be used to enter at or near the retracement level and when you are expecting the market to bounce from that retracement level.

·         If you require some kind of confirmation before entering the market, a stop order might be a good choice.

·         A market order is suitable when the timing provided by the system is critical.

Two types of orders – entry at open or at close, and entry on stop – appear through out the study of various patterns in this post

Strategies Used in Exit

Money Management Exit

A money management exit is usually implemented using a stop order. Such a stop closes out at a specified price below (if long), or above (if short) the price at which the trade was entered.

Trailing Exits

Typically, a trailing exit is implemented with a so called trailing stop. The purpose behind this type of exit is to look in some of the profits from a trade. As the market moves further in favour of the trade, the trailing stop can be moved up if you are going long – or down, if in a short position – which is why it is called a trailing stop.

Profit Target Exits

A profit target exit is generally implemented with a limit order placed to exit the position when the market has moved by a specified amount in favour of the trade. For example, if a profit target of Rs 1,000 is set on a long trade on the Nifty, a sell at limit order has been placed.

Time Based Exits 

Time-based exits involve getting out of the market on a market order after having held the trade for a fixed period of time, usually at the time of the market close the same day, or on next day’s open, or after two days at the market close, etc.

Finally, all these exit strategies are for you to decide based on your trading patterns. For those who do only intraday trade, some of these strategies might be little tedious to implement as the movement involved with intraday trade is very fast and one needs to take quick decisions based on his or her individual trades. However, even on intraday trade these basics can work out to be the best keeping in mind and applying at the right time.
Talking on a personal level, I myself do intraday trading most of the times and find it little difficult in times especially when the market movement is too fast. At this time based on individual trading experiences applying what suits best for trade is advisable.

Remember, your ultimate goal is to come out as a Winner!