Let's assume that you use some kind of chart to look at trends, choose your entries and possible use them for your exits. The most common question is then, where do you get out of your position? Winner or loser, how does one determine where to exit? Well there are many ways but today we will use a simplified method that will help get you thinking about the possibilities.

We're going to talk about moving averages today in terms of a trailing stop. This is for the trend traders that want a way to assume that the trend has ended. If you are a short term trader looking to capitalize on quick, short term trends then many will use the 8 or 10 simple period moving average on a daily chart as a way to identify a trend and where it may be ending. I should not that this is for the short term trader. Those looking to be in and out in days.

For the mid term trader looking to ride a trend longer and not be influenced by the day to day jitters of a stock, the 20 period moving average is by far the most popular. Looking at Amazon (AMZN  ) from April to June you can see a smooth, rising trend that is staying above the 20 period moving average on the daily chart. A mid term trader may look to ride that trend until such a time that price moves below the moving average with above average volume.

For the long term trader, you are willing to ride more pullbacks in hopes of the bigger move in the future. By far the most common moving average to use in this case is the 50 period moving average on the daily chart. As a special tip, if you prefer to use the weekly chart (as many long term investors do) then the 20 period moving average on the weekly chart is the same as the 50 period on the daily chart.

Identifying trends is quite easy to do, finding a trailing stop technique that fits your trading personality is something that take s a little practice and experience but is not something impossible. Play with different ideas until you see what fits your style and emotional tolerance.