Guide to Day Trading Strategies

Exit Indicators
If I see any of the following exit indicators, I immediately exit my position:
1. A 
À
ve minute candle making a new low BEFORE I have scaled out of half my position (
À
ve 
minute candles making a new low can indicate a possible reversal)
2. Price breaks below the 9 EMA on the 
À
ve minute chart
3. I adjusted my stop to breakeven and get stopped out
When I am trading momentum, I have learned to follow a handful of reliable exit indicators. If I 
am in a trade and I see an exit indicator, I immediately close my position, regardless of the total 
pro
À
t or loss. I have found that waiting for my stop to hit after seeing an exit indicator will only 
serve to make the loss bigger. The goal of trading is to cap our losses. That means as soon as a 
trade gives you a reason to exit, you take the hint and move on to the next opportunity.
The 
À
rst exit indicator is a 
À
ve minute candle making a new low, before I have scaled out of half 
my position. Once I am in the driver’s seat and have sold half my position, and adjusted my stop 
to breakeven, I am willing to hold through a 
À
ve minute candle making a new low. I may end 

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up holding through the formation of a second bull 
Á
ag and be able to ride the momentum. As 
long as the price does not come back down to my entry price, I can stay in the position.
The second exit indicator is the price breaking below the 9 EMA. Regardless of whether I have 
scaled out or I am holding my full position, if the price breaks below the 9 EMA, I have to exit 
the trade and take whatever pro
À
t or loss I have. I use the 9 EMA to gauge the strength of the 
trend. Strong momentum stocks will trend along the 9 EMA, making moves up and away, and 
then consolidating back down near the moving average. Stocks can run all day long without 
breaking the 9 EMA. By using a break of the 9 EMA as my 
À
nal exit indicator, I have the potential 
of holding a partial position for hours while a stock continues to run. This is how big winners 
are made.
The 
À
nal indicator is if my stop price is triggered. My stop price should have initially been based 
on either my maximum loss or a speci
À
c support level. As the trade progresses, I adjust my stops 
À
rst to breakeven, and then into the pro
À
t zone. By holding that 
À
nal position until my stop 
À
red, 
it ensured I have traded the full range without selling too soon.

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CHAPTER 9