Backtesting my 50% retracement system for Apple stock is a perfect example of how it works.
Drawing my bespoke fib levels from the previous low to the new high gives me my entry point, stop and initial target.
ENTRY 50%
STOP 25%
TP1 100%
Closing (selling) 50% of the initial position at TP1 allows the remaining 50% of the position to be risk free.
There are two methods to manage the trade beyond the initial target:-
Scaling out (conservative) = Closing 50% of the remaining position at each TP.
TP2 (4R)
TP3 (8R)
TP4 (16R)
TP5 (32R)
etc,etc.
Balls deep (aggressive) = Moving the stop to the previous entry price as each new TP is hit, accumulating a large risk free position which will eventually close out as structure breaks down.
Drawing my bespoke fib levels from the previous low to the new high gives me my entry point, stop and initial target.
ENTRY 50%
STOP 25%
TP1 100%
Closing (selling) 50% of the initial position at TP1 allows the remaining 50% of the position to be risk free.
There are two methods to manage the trade beyond the initial target:-
Scaling out (conservative) = Closing 50% of the remaining position at each TP.
TP2 (4R)
TP3 (8R)
TP4 (16R)
TP5 (32R)
etc,etc.
Balls deep (aggressive) = Moving the stop to the previous entry price as each new TP is hit, accumulating a large risk free position which will eventually close out as structure breaks down.
