Where to Take Profit, Targeting Liquidity

[Fairman]

Where to Take Profit, Targeting Liquidity

Many traders spend weeks on entries and five seconds on exits. Yet where you take profit shapes your entire equity curve.

diagram.png (45.01 KiB) Viewed 44 times

In SMC, the logic is simple: price moves from one liquidity pool to another. So your targets should be liquidity levels.

Common target choices:

- The previous swing high or low
- Equal highs or equal lows
- The opposite side of the Asian or London range
- Previous day or week highs and lows
- An imbalance (FVG) that hasn't been filled

A practical plan:

1. Before entering, identify the nearest opposing liquidity pool.
2. Measure the distance from your entry to that target and compare it with your stop distance. If reward is under 1:2, skip or find a better entry.
3. Consider taking partial profit (for example, half) at the first target and moving the stop to break-even.
4. Let the rest run to the next liquidity level.

Warnings:

- Don't set the take profit exactly at the equal high. Price often sweeps it first, so place it slightly before.
- Don't change targets mid-trade because of excitement.
- Don't hold for "just a little more" once your plan is complete.

A trade with a clear target is a trade with a clear plan. Write both stop and target before you click. Greed hates plans, and that's why plans work.

[PropScalpDesk]

Steps 2 and 3 interact. Take half off at the first target and let the rest run to 2R, and a full win averages 1.5R, not 2R. So "1:2 minimum" plus partials is really a 1:1.5 filter on the trades that work, and the expectancy maths should use that.

The break-even stop has a cost problem too. On a commission account a stop at the exact entry closes slightly negative, and on a short the spread adds to it. I put it a pip beyond entry so "break-even" really is flat.

Fully agree on not parking the target exactly at equal highs, or exactly on a round number.

[LondonNewsTrader]

Consider taking partial profit (for example, half) at the first target and moving the stop to break-even.

Partials and break-even are sensible on quiet days, but around scheduled data they need a second look. A break-even stop 2 or 3 pips from entry sits right in the zone that the spread spike can reach in the seconds after a release, so you can be stopped at entry by a price that only existed on the ask side for a moment.

I'd also add timing to the target plan, not just distance. If the opposing liquidity is 40 pips away and US retail sales is due in 25 minutes, the real question is whether you intend to hold through the number. Decide that before entry. Either the target has to be reached before the release, or the position is cut to a size you are comfortable carrying through it.

Your warning about placing the take profit just before the equal high is good. Same logic applies to round numbers before a fix or a big option expiry.