Chart Fanatics
August 20, 2026
Trading Champion's Risk Management Strategy
TL;DR
A professional trader scales out of winning positions at 2× average daily range profit, then exits remaining positions when price breaks key moving averages that the stock historically respects.
Key Takeaways
- 1Exit one-third of position when unrealized profit reaches 10% (double the average daily range) in trending markets
- 2Use historical 10-day and 20-day moving average breaks as exit signals for remaining two-thirds of the position
- 3Analyze each stock's 20-day average daily range to set profit-taking targets that match the asset's volatility
- 4Identify which moving averages the stock historically respects before using them as stop-loss levels
Notable Quotes
“The moment my unrealized profit is at 10%, so double the ADR, I'll take a third of the trade off.”
— Trading Champion
“If this stock has historically shown tendency to respect the 20-day and it breaks below the 20-day, I'll take position off.”
— Trading Champion
Chapters
1. Position Scaling in Trending Markets
When unrealized profit reaches 10% (double the 20-day average daily range), take one-third of the trade off the table, leaving 2/3 of the position exposed to continued trends.
2. Using Moving Averages as Exit Signals
Exit remaining positions when price closes below the 10-day or 20-day moving average, depending on which level the stock has historically respected.
Glossary
- ADR
- Average Daily Range — the typical price movement (in percentage or points) a stock experiences over a specific lookback period, commonly 20 days.
- Moving Average
- A technical indicator that calculates the average closing price over a set number of days (e.g., 10-day, 20-day) to identify trend direction and support/resistance levels.
- Scale Out
- A position management technique where a trader exits a portion of a winning position while letting the remainder run, locking in profit while maintaining upside exposure.