Has It Reached the Target Area

Not only do you have to look to see if a trade is near its target area, you should also keep an eye out for trades that have already hit your target area. Let's say the market traded through a channel you had set as a target. You didn't exit because maybe the move was strong and you wanted to let your profits ride, which is a valid excuse. You now need to reevaluate the exit points. Should you come up with a new target and stop areas or should you get out, because your original level was hit? You could maybe keep the trade and use your old target as your new stop. You really want to be on top of a trade like this because there is no worse feeling then having a trade reach its target and then some, then getting a little greedy and before you know it goes against you and it turns into a loser. These losers are hard to exit because you keep thinking it will come back to the best levels of the trade and you end up just watching it fade away. Let's say in Figure 7.2 you did not exit at the target level and now the market is trading in the second circle. You need to now reevaluate the trade as a new trade and determine if you'd like to keep it as well as make a new target (target 2) and create a new stop level (stop 2). You may introduce new technical indicators to help you decide. I personally would have gotten out the second time it dipped below the 13,531 level. I would have given it one time to test the level and if it dipped below a second time I would exit. The reason being that I gave it a shot to work and it didn't right away, and it has already reached the target so why not get out?

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