Money management
When there are no open positions on the market, the trader is more clear-headed and can analyze the available alternatives more objectively. However, everything changes when a position is open: whether the market moves in our favor or against us, it becomes incredibly difficult to maintain the same clarity we had before. Therefore, algorithmic exit management is crucial as it can provide the trader with much-needed support at the most critical moments. Sometimes traders use algorithms just to exit positions because they know this is a very difficult task.
The main exit tools are the following:
- Stop loss: A stop loss is a predefined price level set by a trader at which an open position will be automatically closed to limit potential losses
- Target: Target refers to the price level at which a trader aims to close a position to realize a profit
- Trailing stop: A trailing stop is a type of stop loss order that moves as the market price moves in a favorable...
