Stops, targets, trailing exits, and time exits

Exit logic controls the trade distribution, account exposure, and operational behaviour. Design it as carefully as the entry.

Every exit makes a trade-off

A fixed stop limits loss but can be hit by ordinary noise. A target realises profit but can cap a trend. A trailing exit can participate in a larger move while giving back open profit. A time exit reduces stale exposure but may close a trade before its thesis completes.

Choose exits based on the market question and holding period, then test them with realistic spread and fill assumptions.

Define conflicts between exits

If a target, stop, trailing rule, and protection halt could all apply on one update, specify the priority. The priority should protect the account first and remain consistent after a terminal restart.

Put account-level protection above strategy exits.
Record the reason each position closed.
Test gaps and both stop/target touches within one bar.
Avoid moving a stop farther away to rescue a position.

Evaluate exit quality

Review maximum favourable and adverse excursion, holding time, exit reason, and what happened after the exit. Do not optimise an exit only for net profit; consider drawdown, cost, tail risk, and whether the behaviour remains understandable.

An exit that is slightly less profitable but more stable and operationally clear may be easier to run at a sustainable risk level.

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