4 - POSITION MANAGEMENT AND EXITBroadcom Inc.BATS:AVGObalinor-- TIME DURATION -- First of all, it is important to be clear about the type of trading strategy you are executing in relation to time duration. Depending on the time Horizon different signals and entries are used, and position management over time changes accordingly. 1) Intraday - Timeframe: From 1 minute to 1 hour maximum - Signals: Key level breakouts, candle patterns or formations 2) Short Term (from a few days to a couple of weeks) - Timeframe: From 1 hour up to the daily chart - Signals: Bounces off supports, moving average reversals, and continuation or reversal patterns 3) Medium Term (from a few weeks to a few months) - Timeframe: From daily to monthly - Signals: Bounces off supports, chart patterns (double tops/bottoms, head and shoulders), and long-term structure breakouts 4) Long Term (investment / trend following) - Timeframe: From weekly to monthly - Signals: Fundamental analysis, major reversal patterns on the monthly chart, and long-term support bounces My trading style: I operate mainly in the medium term with equities, targeting profits ranging from 30% to 100%, and in the long term exclusively with ETFs. I execute very few short-term trades and do not trade intraday because it requires too much time. * A famous quote by Larry Williams: "The secret is to have small positions and catch big moves"* -- POSITION MANAGEMENT AFTER ENTRY -- Entering the market is "easy" and sometimes done too lightly, but subsequent management determines the magnitude of profit or loss. At this stage, risk management and operational discipline become crucial. In the market, prices continuously rise and fall following news, seasonality, and a hundred other reasons; failing to exit at the right time often results in giving back a large part of the gain or even turning the trade into a loss. When I execute a trade, I have already estimated its duration, the target price, and where to close if it doesn't go as hypothesized. I set the Stop-Loss immediately after entry, even if it is "far" from the current price. From the moment a stock enters the portfolio to the moment it's time to sell, weeks or months often pass during which everything happens: earnings reports, news, conflicts, tariffs, etc. Over time, I have learned to follow my stocks the absolute minimum necessary because watching them constantly often leads to making bad trades! Generally, I always do a check of the entire portfolio at the end of the week and the month when the new candle is "ready," and occasionally I check the daily chart if there are days with special events. Volumes must always be observed carefully because they help determine whether price movements are real or fake. It can happen that some unexpected event changes the initial thesis. First, I observe the volumes, and then I rely on experience to decide whether to close and cancel the trade (I will try to dive deeper into these aspects in the chapter on emotions). -- THE THREE POSSIBLE SCENARIOS -- 1) The stock reaches the target Generally, I close my position at the target, especially if it involves formations like head and shoulders or double bottoms. In the case of a target at resistance, however, I prefer to take a partial profit by exiting with only half of the position. *A few days after entry, if my trade moves in the right direction, I usually raise the Stop-Loss, placing it ahead of my entry price to "secure" part of the gain* 2) The stock approaches or hits the Stop-Loss When the stock moves in the opposite direction of what was anticipated, the first thing I evaluate is a reduction: I sell half manually or by setting a conditional order before the final Stop-Loss. I also double-check whether the Stop-Loss is set correctly; it must be placed where the trade thesis is no longer valid, but always allowing a little extra margin. (I've lost count of how many times there was a spike down that triggered my stop only to surge back forcefully in the intended direction, without me..) Do not average down; you must absolutely avoid buying more shares as the stock drops to fix the average purchase price (PMC), unless it is a planned accumulation strategy. Adding money to a stock that is heading in the "wrong" direction often just means increasing losses. *It can happen that a stock crashes and no Stop-Loss was placed (in my early years this happened to me many times too, as it is one of the most important lessons to learn). The best solution for me is to reduce/halve the position* 3) The stock moves sideways Unfortunately, it happens.. the breakout seems to have arrived, but instead, the price falls back below resistance and hovers there oscillating for days or weeks. Locked-up liquidity also has a cost, because money tied up in a stagnant position prevents you from seizing other opportunities. Generally, I close as soon as I am near my average purchase price (PMC), and I rarely halve/reduce the position if I see that volumes still remain above average. -- LONG-TERM MANAGEMENT (ETFs AND PAC / SAVINGS PLAN) -- Long-term trades via ETFs benefit from a time horizon that allows you to ignore short-term volatility. In this case, I use a PAC (automatic monthly accumulation plan) that maintains the initial balance regardless of market phases. This accumulation consistency guarantees an optimal average purchase price (pmc) over the long run. Alongside this PAC, I hold some sectoral ETFs where I increase my shares only during weakness phases. *To date, this is the portfolio component that gives me the best performance; I will talk more about it in the next article* -- EXITING THE MARKET (SELLING) -- Selling can be voluntary (planned closure) or automatic (hitting a Stop-Loss or forced liquidation). Accepting losses and learning to cut them promptly was the real turning point for my profits. In my first year, I hurt myself a lot by holding onto stocks that kept dropping, and only rigorous money management allowed me to survive. At the moment of selling, I adopt the same strategy as for entries, splitting the exit into at least two tranches. This approach helps me correct my tendency to anticipate market movements too early. On large-cap stocks, you can exit "at market" thanks to the tight spread; on small and mid-caps, however, it is always preferable to place a limit order. To choose the exact price, I observe the order book and position myself a couple of ticks ahead of the bulk of the orders, anticipating the price levels also used by other investors. -- DEEP DIVE INTO THE STOP-LOSS -- 1) Always activate the Stop-Loss Setting a Stop-Loss is not just a recommended practice; it must become a non-negotiable habit. Life is unpredictable: a loss of internet connection, a family emergency, or an urgent commitment can distract us at the worst possible moment, turning a small loss into a disaster. If I don't know where to place it technically, I calculate a maximum tolerable loss between 5% and 20% (I will discuss this in money management), and if the trade doesn't go as expected, I often sell manually even before the stop is reached. *Be aware that a Stop-Loss placed on an illiquid stock can easily add another 1–2% to the loss due to slippage* 2) Where to place the Stop-Loss Deciding where to place the stop is one of the biggest challenges. Every trader has experienced seeing their stop get triggered right a moment before a trend reversal. A couple of times, my automatic sale marked the exact low of the entire day! In addition to analyzing chart structure (supports, resistances, and moving averages), you must consider the stock's volatility: if a stock historically fluctuates by 10%, the stop must be placed at a greater distance. Two mistakes must be strictly avoided: - Continuously moving the stop in the hope of a recovery. - Falling into revenge trading, which is the temptation to immediately make up for losses (I will talk more about this in the chapter dedicated to emotions). 3) Viewing the Stop-Loss as an ally People often think of the stop-loss as a simple brake to limit losses, but over time I changed my perspective and now view it as an important tool to increase profits. When a market analysis is wrong, closing the trade promptly does not mean suffering a defeat, but rather immediately freeing up precious liquidity. Markets continuously offer new entry opportunities at different price levels, both on the same stock and on others. Having capital available again allows me to wait once more for the right moment for a new entry, increasing the probability of success and aiming for a higher gain. 4) Stop-Loss hunting (Spike down) This phenomenon occurs when the price undergoes a rapid and violent temporary excursion (spike down or "stop hunting") that triggers Stop-Losses, followed immediately afterward by a decisive rebound. How does it work? The main problem for large institutional operators is not capital availability, but liquidity, meaning the amount of shares available on the market. If a large investor were to buy or sell huge volumes all at once, they would risk moving the price unfavorably, causing them to lose part of the profit. To overcome this problem, a strong temporary downward pressure (spike down) is sometimes generated, causing the price to crash and triggering a chain reaction of Stop-Losses placed by traders below supports. This wave of automatic selling frees up the liquidity that large operators need to accumulate their desired positions (at lower prices) before the market resumes its upward trajectory. A spike typically manifests at the end of accumulation phases, when the price moves sideways at lows for a prolonged period, right before the start of a new bull trend. From a psychological standpoint, experiencing a spike down is particularly frustrating, because you take a loss only to watch a strong rally immediately afterward, leaving you locked out of the trade. Completely defending yourself against these dynamics is complex, since the magnitude of the spike is often enough to overwhelm even the farthest Stop-Losses. To manage this contingency, when I recognize this type of setup, I make only a partial entry without a Stop-Loss, waiting for the breakout of the sideways phase before completing the position and setting definitive protections. If this article is appreciated, I will proceed with the next one: "5 - Money Management" Thanks for reading, Balinor Link to the previous articles, which I ask you to like if you enjoyed them: 1-From beginner to trader 2- How I choose the stocks to follow 3 - How I Decide My Entry Points