One of the areas where a lot of traders struggle is identifying
when to exit the trade. Identifying the exit point needs to be
close to accurate else you may suffer loosing a lot of pips either
by closing the trade prematurely or being too late.

One of the straight forward way to exit a trade is by defining
a limit price where the trade will close automatically.

Nice approach! Nothing wrong with it. However there are some pros
and cons with it.

PROS -

1. You are more or less assured that your trade will close when you
want it to close. So, this approach frees from watching the trade all
the time. 

2. If analysis is done correctly, setting limits can help your trades
emotion free, since it is your analysis that wll define the limit and you
won't be tempted to become greedy.

CONS -

1. Thorough analysis is necessary to define the limits. Otherwise the
trade may close either prematurely or beyond the optimum point. Both
conditions are risky pip wise.

2. If the market reverses without meeting your limit and you are not
watching your trade, that can hit your account very hard if you don't have
appropriate stop loss in place.

As you could have deduced from above, there are certain timeframes where
you can use the limit approach. Day trading timeframes (trading on 15 min.,
30 min chart etc.) is one of them.

But while trading on daily chart, you should monitor the trade and close it
only when you see the sign of market reversal since you have to do the
analysis only for limited time a day.

Article By 

Rahul

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