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Al
In a recent post you wrote that you didn't post many e-mails because
your style was different and you didn't have anything to say. I can't
wait till you start talking, we'll all retire rich. This is an absolute
gem and exactly the type of discussion I was hoping to see. I've printed
it off so I can read and reread it in my easychair in the evening.
Good trading
John
Al Taglavore wrote:
>
> John Manasco wrote:
>
> Snip-Snip-Snip
> > So I admit it, I sometimes lose money because of my exit strategies. A
> > lot more than I would like to admit. So what are some of your thoughts
> > on exiting a position. I really hope I get a lot of feedback on this
> > because this is really important to me, and it seems to a lot of other
> > people too.
> >
> > John Manasco
> ============
> I agree, John. To make money, one should give as much consideration to
> the exit as the entry. One could do very well entering the market at
> 8:45 am each day provided he had a good exit system that would take him
> out if wrong and allow him to keep a large portion of profits if right.
> Last year I was introduced to the 1/2 of ATR and the 1 1/2 ATR exit
> strategies...exiting if the market moved 1 1/2 of ATR against your
> position. More conservative: 1/2 of ATR.
>
> I have found that basing the exit on the ATR gives me a sense of where I
> am in a move. Studying my market helps also: I have found that when the
> DMark retraces 20 ticks of a move, the retrace is likly to continue.
> Also, when I give up 9 ticks on a profitable DMark trade, I will take
> the profit and, while still on the phone, place an order to re-enter if
> the price regains the 9 ticks. This one ploy has made a significant
> increase in what I take out of a trade. Harley made a post concerning a
> short position on AMAT today. An example of the aforementioned exit is
> when AMAT traded down to 23, then moved up to 24, take the profit at 24
> and sell AMAT short again at 22 7/8. If the move continues against your
> short position, you have your profit. If the move continues in your
> favor, you only lose a "Potential" 1 1/8 points of profit. If the move
> does not take out the previous low, you are not in the trade. You have
> booked your profit. Low risk situation.
>
> One should not have to second guess a trade: the market tells if you are
> right or wrong AT THIS TIME. One can have the direction right, but if
> the timing is off, the results are the same: lost money. Do not take a
> loss home. Never allow a profit to turn into a loss. Never!
> On a TBond trade I will take an eight tick loss on an opening position,
> and then I am gone. I will have lost money, so I cannot be right. One
> tick on the Bond is $31.25. Commission on a day trade is $28.50. I can
> always re-enter the trade at a lower cost than staying with a losing
> position . On a stock trade, if I am short and price trades above
> yesterday's low, I am out. I have no way to know if the next tick will
> be higher or lower, but I do know that in order to go up, price has to
> trade above yesterday's low. If long, and price does not violate the
> previous day's low by "n" ticks (your own risk tolerance), I will stay
> with a profitable trade...as long as price does not trade below the
> previous day's low. If price trades below the previous day's low (- "n"
> ticks) I am gone. If price turns back up, I can re-enter above the
> previous day's high (plus "n" ticks). Exit and re-entry...certainly as
> important as entry.
>
> How does one develop and maintain this discipline without allowing
> emotions or feelings to interfere? It really is not difficult. Be on
> the wrong side of a Bond trade at $31.25 per tick for a full point.
> Believe you have a feel for the market and get on the wrong side of a
> govt report day when the bond can and does move 2 points within 5-6
> minutes. Have a three contract position. Then it goes your way, and
> instead of making 2 points ($6000) you are out $6000 and you were really
> right...just off maybe an hour. Very humbling experience. After one has
> lost lots of dollars, one becomes sensitized. No feelings, just stop the
> flow of blood early. After one takes some $5000 licks, it ain't hard to
> take a $1000 loss. Not hard at all. For that loss to get to $5000, it
> had to pass $1000 first. Been there. Done that.
>
> Realize that while you are agonizing over a losing position, you not
> only lose on that position, you lose the opportunity to win on another
> position. Take the early loss and let it be small. Did not learn this
> from a book. Paid the tuition in cash.
>
> Al Taglavore
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