The other night (Australia time) I was trading wheat and found myself long 4 contracts in an erratic trading session. 



Sadly, I had missed the first great breakout to the downside, and felt that the lows for the day had been made. Eventually I went long at about 944 with a target of 954.5. 



Now the first thing to notice is that the very best thing I could have done is automated my exit and gone to bed!  This is the strategy recommended in my eBook whereby I would have entered a stop loss order at about 942, a limit order at 954 and a market order to exit 30 seconds before the end of the session. The orders are linked in a One Cancels Other group so that only one of them ever executes.



However, on this evening I did not take my own advice, and settled down to watch the progress of the trade.



Pretty early on there was an exhilarating spike up to 951.75 followed by a distressing decline right back down to 944.5. Then we were off to the races again with a move up to 953, only to have our hopes dashed as price swooped back down to 946. Finally, after much sideways action there was another burst up to 955 before a calamitous nosedive into the close.



I do not know about you, but I hate to sit and watch a session like this!



I still say the best way to handle the situation is to automate your exits and walk away. What you do not see, you do not stress about. But if you must watch, there is something else you can do.



In this instance, I was long four contracts. When that first happy spike came, I sold a couple of them just over 950. Now, even if price declined and hit my stop for the other two contracts at 942, I am still in the black for the day.



Once I have done this, I quite enjoy watching the session. I know I cannot lose and there is a chance of quite a big win, which is what happened in this case.



Of course, I have given away some profit. If I had held on I could have sold all four contracts at 954 instead of dumping two of them cheaper. But that is a price I am happy to pay to reduce the stress of trading.



Anyway, trading is all about managing risk. The stop might have been hit today, and if I had taken no action I would have been down about a dozen points (two or three points per contract, allowing for slippage which is endemic in the wheat market). By taking the action I did, I ensured a profit of six to eight points, with the possibility of an overall profit of around thirty points. 



So, without being too prescriptive, my advice to you is to trade a market where you can afford to enter positions with multiple contracts, then carefully consider what your exit strategy is going to be.



Keep in mind that you do not have to sell all your positions at once, a point that is often forgotten in the heat of battle.



For that matter, you do not have to buy all your positions at once either, but I will leave that discussion for another day. 



(If you want to see the chart I am referring to, it is displayed on my blog entry.)