Originally published in French on objectifeco.com, June 25, 2014, as "Dans cet article au moins une info que vous n'aurez lue nulle part ailleurs". The site was purged in 2016; this text survives only in the Internet Archive (Snapshot). Translated, not rewritten: what follows is the original argument as it was made, including what time has since proven wrong. Where that happens, you'll find a note from the desk, dated 2026.
This is the third piece in a short series where I'm picking apart every single element of a trade, and the decision process that leads to it.
In the first piece, I showed that we spend far too much time on the entry price, when it's actually the least important part of the whole thing.
In the second, I set out the idea of context, which should let you meaningfully improve your odds of success.
Today I want to talk about the most important idea of all, and the one people spend the least time on, which is the exact opposite of how they treat the first: the exit.
Before going any further, I need to press on one point that should genuinely help you improve: the psychological side of holding a position.
The moment you open a position, you're going to feel things. The more experience you have, the better you get at controlling or managing those emotions, or blotting them out altogether.
You already know emotion is the enemy of clear thinking and rational decisions.
That's exactly why most traders don't put nearly enough work into their exits. They let their emotions steer the ship.
As long as the position is behaving roughly normally, we're not in any real danger.
It's when emotions get pushed to their absolute limit by the situation that a trader loses his bearings.
Obviously, during heavy losses, it's fear that paralyses us, but I've noticed traders eventually get used to that. Probably because when you're starting out, you inevitably go through plenty of losing stretches, and experience toughens you up.
Euphoria, on the other hand, the kind that shows up when you're winning big on a position, is far harder to keep in check. Probably because it's rarer: most traders get out of a winning position far too early and never let their gains run.
I've written this before, more than once: it's actually one of the main reasons most traders fail.
It's genuinely simple: when a new client starts trading, all you have to do is watch whether he's capable of landing a big win to know whether he's got any chance of lasting. If, within the first month, you see two or three trades post a big gain and the losses stay under control, you know you're dealing with someone good, and he'll survive.
For everyone else, it's only a matter of time before the account takes a hit deep enough that it can't climb back out.
If I were a trader reading this, I'd tell myself: I want to be one of the winners, so I'm going to give myself the means to be one. I'll learn to control my risk and let my positions run. It's the only way to win.
And yet I see it every single day: people spend an insane amount of time working on their entry price, and flat-out run from managing their exit.
As if the buy decision had already sealed their fate, and nothing after it mattered.
It's exactly the opposite: the entry carries a huge amount of randomness, and only the EXIT actually counts.
So let's talk about that exit.
First, let's look at the ways you can get out of a position.
A lot of traders think an exit in one direction should, most of the time, produce an entry in the other direction, that the exit becomes a fresh signal in itself.
That's a serious mistake, and a very common one.
You went long because you judged there was upside potential. You'll get out once that potential has played out, or because it's disappeared. And the disappearance of that potential absolutely does not mean a different one has taken its place. You follow?
The exit that comes to mind first is the target exit, profit or loss. That, of course, raises the question of the target itself.
My own experience has shown me that this reasoning is too simplistic, for one obvious reason: markets go through very different phases.
It's easy to see that when the market is highly volatile, you have to adjust your orders accordingly, and, just as much, when the market is very quiet, you can't sit around forever waiting to close a position.
So it's essential to factor in market volatility when calibrating your risk and your profit target.
Another, more unusual exit: forcing a close after a set number of bars.
The first time I saw a trader do this, I thought: what a strange idea. Then I thought about it properly, and I decided it was actually brilliant.
Why so brilliant? Well, when you take a position, you take it because, at that particular moment, the market sits in a specific context, and you believe you've got a real shot at winning by doing this or that, right?
Any given context inevitably has a shelf life, long or short. Once that shelf life is up, the context is gone, and the market has nothing left to do with whatever pushed you into the position in the first place. So why hang on to it?
Setting a maximum holding period, on top of a target, is therefore a good way of forcing yourself to re-examine your positions at regular intervals.
Very few of my clients use this technique. But among the best ones, I see a large majority doing it in one form or another. Interesting, isn't it?
Now that we've covered the different types of exit, let's look at how to actually execute one.
I'm not about to reveal a secret here. It's just plain common sense.
The right exit is the one that makes you money.
I've been watching hundreds of accounts for years now. I've written it again and again: traders are generally not bad at getting into a position.
But they are UTTERLY HOPELESS at getting out of one. They don't work at it, they let their emotions run the show, and most of them have no logic whatsoever in what they're doing. And for the rare few who do have some logic, discipline is rarer still.
The EXIT, more than any other part of your trade, is what decides whether you win or lose. That's simply a mathematical fact. So why does it get so little attention?
There's only one way to win, and you already know it: lose small, never let an accident sweep you away, and win big on a handful of trades.
The truth is, getting there means accepting things that are genuinely unpleasant, on a human level.
Most people choose the easy path, and that's exactly what leads them to fail.
Part of a series. This article belongs to The Exit Decides the Trade, Not the Entry. Related: What Price to Buy At: The Question You Shouldn't Be Asking and Knowing How to Get Out of the Market. Background: take-profit order in the Ouinex glossary.
About the author. Samuel Rondot has traded since 1995, self-taught. Between 2009 and 2017 he published around 300 articles on objectifeco.com, abcbourse.com and his own blog, many of them drawn from what he saw in hundreds of client accounts. Objectifeco wiped its archive in 2016; the Internet Archive kept a copy, and every article republished here links to its original. He now runs the Strategy at Ouinex.
Trading leveraged products carries a high risk of loss.
