Where is the ideal stop loss? It can be the previous higher low or the last pullback low, depending on how large a risk the trader is willing to take. The last pullback is a scalp risk while the last higher low is longer intraday trade.

When we do take profit? Here are two options:

1. Look for the next resistance, it could be yesterday's high, this week's high or last high of the last few weeks. This strategy is best when the trade was initiated in the middle or latter part of the trend.
2. But the best indication to take profit is when the price action is no longer making a HIGHER HIGH and HIGHER LOW. Either it has gone into a range or it is now making a LOWER HIGH AND LOWER LOW. Following this strategy will ensure the trade will ride out the entire trend.
   Either option will provide a minimum profit at least 2 or 3x the amount of risk taken (stop loss amount * 2 or stop loss amount * 3). Below is the example of the second exit strategy where the profit exit line hits below the last higher low.

Below is the chart with a strategy for shorting the rallies in a downtrend. It’s the exact opposite rules to long entries. When the small rally is ensuing, when a new bar that makes a low past the previous bar's low, that is the ideal entry.  Target is the previous LOWER HIGH or the last rally high. And the exit occurs when the market is no longer moving down by not making a LOWER LOW and is now reversing to make HIGHER LOW or at next support. The best risk/reward entry is the first or second HIGHER LOW.

This is very straight-forward way to making high probability trades if a trader is willing to take the time to learn the price action. Most professionals use this tactic time and time because it's one of the safest win-win trades (high probability of success with extremely small stop but a large profit target). With enough practice and observation, price action will be the primary confirmation and indicators will only be a second confirmation signal to make trading decisions. Despite the extensive use of technology for trading today, the market still speaks to traders in simple ways-- price action. So if a trader wants to listen and understand what the market is saying, this is the best way to learn to speak its language.