Understanding the phrase ‘when you hit your target, leave the markets’

As a young trader, about 4 years ago, like all other traders, I read a lot about trading on anything that I could land my hands on. For those of you that know my background, you must have guessed that I spent lots of hours online reading anything on the internet related to trading. 

I soon discovered that most traders would suggest that one should leave the markets after hitting their targets. I understood it to mean that one should have a target and once hit, they should stop trading. 

I actually started trying it out on live accounts. I would set a target of 500 USD per day on an account of 5,000 USD and if I hit the target (made the 500 USD) maybe at mid night, the following day, I would not trade. I would convince myself that I had hit my target so I would have to let go of all my trades.

Soon, I realized that daily targets never worked that well for me.  I would set a target of 500 USD but on some days, I hit stops of more than -1000 USD. I had to adjust. So I started setting weekly targets. Which if I managed to hit in the middle of the week, I would stop trading for the remaining days of the week. But again, some weeks, I would never reach my target and end up making losses. So I modified my strategy to set monthly targets. However, along the way, I realized how wrong I was. Not that targets are bad, but I was totally messing up the whole concept.

Four years later, I now understand what the phrase ‘when you hit your target, leave the market’.

It basically assumes that as you were setting the trade, you placed your stop loss, your entry and your take profit (target). Should you hit the predefined target, then leave that trade. Unless you had pre-defined to stay in and rock in more profit. Otherwise, once take profit is hit, leave that market (trade) don’t be deceived that the trade is still rolling in your favor and you dive back in. 

Also it does not mean that when you hit your target, you should close all your other trades and go to have fun. No. It means that you leave that particular trade and let the other trades play out their own way. 

Let me use an example below. On my charts, blue lines are support/resistance, the brown lines are my entry and stop loss and the green lines are take profits.

As you see from the above trade, after the trade hit take profit or target (green line), it continued going down. Many a trader are tempted to dive back in and make extra pips. The most right thing to do is to respect your pre-defined target and leave that market after hitting your target.

You can even close the chart and monitor your other trades if you have any. This is what it means. To respect the pre-defined target regardless of what is happening in the markets. Otherwise, you will make the money and when you dive back in, you leave all the money you made in the markets and end up in negatives.

When traders say ‘Leave the market after hitting your target’, they mean, leave that trade. Unless you had set multiple targets. It does not mean stop trading and go to have fun. No. It does not mean close all open trades since you have hit your target on one trade.

In simple terms, the phrase, ‘Leave the markets, when you hit your target’ means that once you have hit your target on a particular trade, get out and be happy with your target on that trade. Just that.