So it’s important to plan how you’ll exit your trade before you put any money at risk.<\/p>\n
I’ve written about my four-step method on choosing trades before here<\/a> and here<\/a>. And today, I’m going to show you the second part of this plan – trade management.<\/p>\n Once I’ve entered a trade, there are just three steps towards exiting successfully…<\/p>\n Reduce Risk<\/u><\/strong><\/p>\n As a trade unfolds favorably, there will usually be an early opportunity to reduce the open risk on the trade.<\/p>\n I like to reduce risk by trailing my stop loss closer to my original entry point.<\/p>\n<\/li>\n Eliminate Risk<\/u><\/strong><\/p>\n Eliminating risk becomes possible as a trade continues to move favorably.<\/p>\n I like to eliminate risk by moving the stop loss to the original entry point.<\/p>\n This gives me a “free ride” on the remainder of the trade.<\/p>\n<\/li>\n Protect Open Profits<\/u><\/strong><\/p>\n This is the last step in my trade management process.<\/p>\n As a trade becomes increasingly profitable, I’ll look to protect those profits by continuing to trail my stop loss higher, as well as by taking partial profits off the table.<\/p>\n<\/li>\n<\/ol>\n Now let’s see this plan in action…<\/p>\n On January 19, I wrote about an opportunity in the coffee futures market<\/a>.<\/p>\n Since then, the trade has developed very nicely. Here’s an updated price chart of coffee…<\/p>\n After breaking through my recommended entry level of $173.55, the market has gone on to rally almost 12%.<\/p>\n This means there’s an excellent opportunity to move to step 2 of my trade management plan – eliminate risk.<\/p>\n At this point, it makes sense to move the stop loss to the initial entry point. That ensures there’s no longer any open risk on the trade.<\/p>\n\n
Using Trade Management on Coffee Futures<\/h2>\n
![\"Chart\"](\"https:\/\/cdn.jeffclarktrader.com\/JMU\/images\/202303\/20230302-jmu-01_dsj835.png\")
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