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Steve Karnish wrote:
> Al,
> No one could of said it better! Everyone, including equity
> players, should reread the comments below, print them, read them
> before they go to bed, read them when they wake up, and paste
> them on the wall next to the computer.
>
> Thanks Al,
>
> Steve Karnish
> CCT
>
> ----------
> > From: Al Taglavore <altag@xxxxxxxxxxxx>
> > To: metastock@xxxxxxxxxxxxx
> > Subject: Re: Exit strategies
> > Date: Wednesday, September 02, 1998 1:41 AM
> >
> > 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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