Stock Price Behavior Analysis Course

Session 22: Practical Application - Exit and Stop Loss Planning Logic (Part 2)

Entering a trade is just the beginning; what truly determines profit and risk is the "exit strategy." Today, we will establish a three-layer exit logic, including profit-taking and stop-loss planning.

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1. Stop Loss Point Setting (Protecting Your Capital's Bottom Line)

• Set based on price structure, not determined by "amount" or "feeling."

• Typically set at:

• In an uptrend: below the previous low

• Breakout strategy: below the breakout candlestick

• Range strategy: outside the range edge

✅ A stop loss is not “exit when wrong,” but “exit when it proves I was wrong.”

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2. Exit Point Strategy (How to Make Money)

1. Target Price Exit

• Based on technical patterns, such as calculating breakout height corresponding to equal space for upward movement.

2. Key Area Take Profit

• If the price approaches previous highs / previous resistance / trend lines, consider taking half off first to protect profits.

3. Trailing Stop

• In a trend, do not set fixed targets, but instead adjust the stop loss upward with the trend, e.g., set the stop loss below the new high each time a new high is made.

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3. Key Points of Exit Discipline

• Strictly adhere to stop loss → Small losses are okay; the key is not to let losses spiral out of control.

• Don't cling to the battle → Exit upon reaching the target; don’t hold on just because “it might go up more.”

• Have a strategy → Exiting should align with the “entry logic,” avoid contradictions.

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