Where do I book profits ? How to ride your WINNERS ?

I cut my losses late but book my profits quick ?!!

The most common thing I come across with new traders. There is no hard and fast rule for anything. So here is my version of riding your winner.

Gold Chart of 03-June-2020 - 5mins Time Frame

Plan a trade on higher charts and book your profit on a smaller chart. We usually have a preset target for every trade, the next resistance/support zone. But depending on the momentum of the trade, small resistance/support zones are breached and the rally is continued further. So the rule I follow is  I do not book profits unless it breaches my exponential moving average. Trending markets are the best for moving averages compared to a ranged bound market. As a day trader, I use 9 EMA and 20 EMA on a 5 mins time frame to book my profits.

In the above graph of Gold, I had planned the following trade. Sell below the support of 46500 for a target of 46000. But it retraced back from 46080, Normally I could have book profit at the 46100 after the retracement which went up to 46300. By applying the Moving Average which usually acts as resistance during the trending markets, I was able to sit on my trade till 46000. But again as it breached 46000 going down till 46700 and I was able to book my profits at the next resistance of 45700 on the Daily Charts and also an oversold zone on the Stochastic. However, if you decide to sit on it further, Moving average and a combination of Stochastic would have helped you to exit from your trade at 45900 as shown on the graph.

Simple but efficient version, you can use 9EMA & 20 EMA. Both work differently on different momentums or say volatility. As the volatility was high in Gold on that day I used 20 EMA. Normal on slower graphs and less volatile markets you can use 9 EMA. 

Note that moving averages only work in a trending market, not a rangebound market. To understand the difference please read further on my blog. 

Thank you and happy trading.