A position trade tracks the intermediate trend of the market. It follows that the trade should continue while the intermediate trend remains in place. But, trade management does not always blindly follow the trend. A number of exit rules may be built in, which are necessary for proper money management.
A position trade that I took for the Nifty was based on these rules:
1. I am expecting a move down to 4000. I will consider exiting once prices come in the 4000 - 4200 zone. this is my profit target.
2. Because I am looking for a large profit, I have to give a fair amount of room to the trade, accepting a number of counter trend rallies while the main trend remains down.
3. If I have clear signals of a rally, I may consider closing my positions, only to restore them after a rally or after a failure of the market to rally. In the first case I will make a small trading profit while in the second case I will have to reenter at a lower price. Since I am prepare to restore my closed position, I consider that I am in the position trade even when I may have actually closed my position partially.
4. My positions consist of mid month Puts.
My notes on these rules: I actually closed most of my positions at the close at 4560 - almost at the low of the swing. These positions were restored when the nifty crossed 4700. The reason I closed my positions was the relentless decline in the market day after day. Finally, 60 minute charts were giving large positive divergences at 3 PM.