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Fear exits vs. plan exits
Recognize when you're closing for the wrong reason.
8 min · Beginner
What you'll learn
- Distinguish plan exits from fear exits using a short list of valid exit reasons
- Measure the R cost of a fear exit compared with holding to the plan
- Pre-commit exit conditions before entry so decisions during the trade are simple
Key takeaways
- There are four valid exit reasons: stop hit, target hit, invalidation on a close, and a pre-written time stop.
- Fear exits cut winners short while losers still run to the full stop, which breaks your R math.
- When you want to exit, name the reason; if you cannot, hold.
- A loss taken on invalidation is a good exit; a small win taken on fear is a bad one.
Glossary
- Plan exit — An exit triggered by a pre-written reason: stop, target, invalidation on a close or time stop.
- Fear exit — An exit driven by discomfort, such as shrinking open profit or a scary candle, with no change in structure.
- Time stop — A pre-written rule to exit if the trade has not moved toward target within a set time.
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