Kardec Trader explains a position-scaling strategy for trending markets using the 20-day ATR. Take profits in thirds: sell one-third at 2x ATR gains, another third when price extends 8-10x ATR from the 50-day moving average, and trail the final third until the 10-day moving average breaks.
With regards to trade management, how I would approach it in a trending market environment. So say I've bought through that breakout level and say average daily range for this stock over the last 20 days is say 5%. And so the moment my unrealized profit is at 10%, so double the ATR, I'll take a third of the trade off. So then I'm left with two-thirds of the trade. Another scenario is before the violation, it's kind of gone somewhat parabolic and, you know, it's extended. A general rule of thumb for me is if price is about 8 to 10 times ATR multiple from the 50-day moving average, I'll Another scenario is if you see all these green dots that are flashing, this happens when price is more than 10 ATR extensions from the 50-day. So by definition, it's considered extended to me. That's when I'll take the next third off. My next third would be, you know, I'm up 50% on the trade. Now I have a third left. I am able to kind of just let it trail, right? And so it keeps trading, keeps trading, and then on a violation of the 10-day, I'll take the entire position off for a win.
