Every profitable trading system has a different optimal exit point. The exit is the one that least appreciated in trading system while it can make difference between winning and losing.
The components of a trading system have complex relationship to each other. In order to determine a proper exit for a profitable position, traders have to consider together with other factors such as entry, money management.
Let considers the turtle trading system; a stop for a position was at 2N, if turtles exited their winning position at N, this means they need twice as many winners to offset the losses from the losing trades.
In facts most of trades in the turtle system would be resulted in losses since they entered a trade on breakouts and most breakouts do not result in trends. So the turtles have to earn enough on average from winning trades to offset these losses.
Turtle Exits
As with entries, turtles were given two systems for exits.
The System1 exit was a 10-days breakout against the position.
The System2 exit was a 20-days breakout against the position.
Typically, the turtles did not place exit stop orders, but instead watched the price moving and started to place exit orders as soon as the price traded through the exit breakout price.
Waiting for 10 or 20 days new low or new high can often mean watching 20%, 40% even 100% of significant profits vanish. This is a most difficult part of turtle system rules. But prices never go straight up; therefore it is necessary to let the prices go against you if you are going to ride a trend.
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