Your trade is in profit so how can you keep the majority of it and not give

too much back? Earlier I covered using a simple trend line to objectively

determine your profit exit.

http://is.gd/trendlines

This article is going to cover structure as a means to exit your trade and turn the paper profits into account profits. For this example I am going to cover longs however the same principles

apply to short trades.

We know that markets make higher highs and lows when moving up and the opposite when heading south. A higher high can only be made when

price is pulling back and depending on your trading method, this presents both long and short opportunities.

Looking at the following chart, we can see that price is in an overall uptrend. #1 - Price makes a higher high & starts to pull back #2 - Price puts in a higher low and starts to rally #3 - Price puts in a lower high and starts to drop

Many people see the rhythm broken and start to think shorting the market is the right play. Price slams through the low and those that didn't short

when the move at #2 stalled, pile in on the break.

For you though, you know that trying to catch the trend turns (selling the high in this case) is difficult and you

also know that two leg corrections are pretty common. You are looking to

buy into the uptrend that is not truly broken. With that, let's turn to the

trade we covered in an earlier article.

This chart shows the buy at an area where price was supported.

What makes sense at this point? Let's look at has probably occurred.

All those that went short have their stops in either of the two red boxes seen on the next chart. What we are not sure of is the

strength of those levels. What is the conviction of those sellers? We won't

know their conviction until price comes back to those areas where a few events

could take place:

- Price can rally right through those levels - Price can be rejected short

- Price can find balance near the top of the swing

We don't know what will happen but

we know this:

If price rallies through the levels, those that sold near the highs will have to

cover by buying which will drive your long position up pretty quickly. It will also confirm that the uptrend is still

intact.

If price is rejected short, there is a good chance our stops will be hit.

If price finds balance and consolidates, our patience will certainly be tested.

Those that lock in some profit may find their stops hit on failed breaks short.

Conclusion? Use those areas to exit part or all of your position.

By having a take profit in those areas we are

using the structure of the market, the rhythm of the market, and accepting a few scenarios can play out in those areas to objectively put some

money into our trading accounts.

Do you leave a runner? Is this the best way to take a profit? This next chart will show you how price reacted to

those highs.

The shorts were ripped out of their positions and longs were driven

upwards 226 from entry while full position exits banked 82 pips.

Was it a good play? Before you say yes

or no, look at this scenario.

You may say you would not have bought the lows but it's obvious some did. They may have seen a big rally up

and then taken the first pullback in fear of missing "the big move". Other may have skipped the first retrace but after seen the big green candle, were waiting for the next pullback to buy.

As you can see, there is nothing guaranteed or perfect in trading.

Understanding Context, Structure, and the Psychology (CSP) of the masses

can be a huge plus in enabling you to add money to your account on a

consistent basis.

Using this type of profit taking can be a consistent way to add to your account because it takes into account the CSP. Using the scale out and trail type of

exits can make this more effective and I will cover that in a future article.