You can control risk by placing a stop-loss order on each trade. When buying and taking a long position, a stop loss goes below the recent swing low. When shorting an asset, you could place it above the recent swing high. In both events, this controls the risk of the price sinking too low, or rising too high. For Renko charts, you could exit when the bricks reverse direction and change colour.
Price action traders need to lock in profits. This can be done in a variety of ways. One of the simplest methods is to use a risk-reward ratio. For example, if the risking $0.05 per share on a scalp trade, exit at a $0.10 profit. That is a 2:1 risk-reward ratio. For scalping, 1.5:1 or 2:1 is common. For swing trading, 3:1 or higher is common, but traders can determine for themselves their desired risk-reward ratio.
Other exit methods include using price action itself. If you enter a trade because a downtrend has started, stay in the trade until the trend reverses. Price action dictates when to get out by providing evidence that the price is turning. If entering at a supply area, consider exiting at demand. If entering near a demand area, consider exiting near supply.
