$Tiger Brokers(TIGR)$  

1. The Logic of Profit-Taking

Buying requires patience: waiting for a favourable setup or valuation.

Selling requires decisiveness: hesitation often turns paper gains into losses.

System vs. Emotion: A structured take-profit plan removes second-guessing and “fear of missing out.”

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2. Take-Profit Approaches Commonly Used

Different traders adopt different styles, depending on their risk appetite, time horizon, and market. Some widely applied frameworks include:

1. Fixed % Target

Example: sell once a position gains +20%.

Advantage: Simple and rules-based.

Limitation: May cap upside too early in strong trends.

2. Technical Resistance Levels

Sell when price approaches a previous high, Fibonacci retracement, or trendline resistance.

Advantage: Reflects actual supply/demand levels in the chart.

3. Trailing Stop (Dynamic Exit)

Place a stop order that rises as price rises (e.g., 10% below the highest close).

Advantage: Locks in profits while giving room for further upside.

Common among swing and position traders.

4. Indicator-Based Signals

RSI overbought (>70), MACD bearish crossover, or moving average break (e.g., 20-day below 50-day).

Advantage: Responds to momentum shifts.

Limitation: Can produce false signals in volatile markets.

5. Scaling Out

Sell part of the position at the first target, hold the rest with a trailing stop.

Advantage: Balances risk reduction with participation in further gains.

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3. Do Take-Profit Systems Improve Performance?

Yes, for discipline: A rules-based exit prevents emotional paralysis.

Yes, for capital recycling: Freed-up gains can be redeployed into higher-conviction opportunities.

But: Overly rigid profit-taking (e.g., always selling at +10%) can undercut performance in trending markets.

In practice, the best traders blend rules with discretion—e.g., trail stops in trending markets but take partial profits into resistance zones.

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4. My Perspective

If I were to formalise a framework, I would suggest:

Primary method: trailing stop + scaling out.

Confirmation tools: moving averages (trend), RSI (momentum exhaustion), and volume analysis (distribution phases).

Adaptability: tighter rules in volatile markets, looser rules in strong uptrends.

This balances discipline (system) and opportunity capture (flexibility).