Advanced Trading: Profit Optimization
This is an advanced trading system on building profitable exit strategies to help you make
more money trading.
I’ve coached hundreds of traders using these principles.
Many of them have seen drastic improvements in their profitability and cut down losses
significantly.
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Tracking Optimisation
I’ve seen hundreds of traders lose money by moving their stop losses to breakeven too
early, not knowing when to take profits in trending markets and for not having an exit
strategy on pullbacks.
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“I’ll sell this move if it retraces 25%” is a common strategy a lot of traders use but there’s no
statistical edge to that statement.
Tracking Optimisation solves this.
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Phase 1: Data Collection
For tracking optimisation, we will use similar data we’ve already collected but this system
works best in trending markets.
You need to have a 30-100 trades’ sample size and collect the following data:
- On average, what’s the maximum % pullback price has made in an uptrend and still
continued to trend
(You can apply the same to downtrend)
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You data might look something like this:
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Phase 2: Decision Making
Maximum % Pullback
Let’s assume you noted that for the 100 trades you took (in your ideal market conditions),
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the maximum % pullback in an uptrend was 10% and price kept trending more.
I.E. On average, the most price fell in an uptrend without breaking continuation was 10%+
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You make the following decision:
In the next 30-100 trades I take, I will ONLY sell my longs if the price makes a pullback more
than 10%. Otherwise, statistically, there’s a greater probability of continuation.
Phase 3: Implement Tracking Optimisation
Let’s look at how Tracking Optimisation would have helped you avoid the big dip while
exiting your winner higher.
Based on your data of what an uptrend statistically looks like, you placed your invalidation
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where the pullback % will be greater than 10%. You know your system flashes a sell signal if
the pullback is greater than this.
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This helped you avoid panic selling the smaller dips because you trusted your data.
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You also exited at $171 $SOL compared to a $165 or $155 $SOL which meant more profits
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to take home.
BONUS: Minor Pullbacks on entries
While you use tracking optimisation and collect data, you might notice that some positions
enter minor pullbacks right after entry. Understanding and optimising for this can enhance
your entry efficiency.
Here’s why this matters:
1. Average Drawdown
- Measure how much your trades typically pull back from the entry
- This is crucial for understanding whether your entry timing should be improved to
reduce unnecessary drawdown
2. Signal VS Noise
- The ideal trade has a strong signal with minimal noise, meaning it moves in your
favour with little to no initial pullback.
- Less drawdown after an entry can mean you’ve captured a high-probability setup.
3. Improving Entries
- Analysing these pullbacks allows you to minimise initial losses and psychological
burden after entering trades
- This then leads to more consistent profits and less stress in trading.
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Phase 4 and beyond
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What should you do next?
● Action Plan: Collect data on the Maximum % Pullback to understand where your
invalidations should statistically be with respect to trending markets.
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● Stay Motivated: If you can consistently execute one strategy and make quality
observations about your system, you’ll beat 99% of traders. Most don’t do this so
make this your competitive advantage. Having an exit strategy is not guesswork- I
just showed you the method so you know it’s possible.
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● I’m releasing more guides like this to help you make money trading. If you want early
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access, join my Telegram and keep notifications on.
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