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In a message dated 10/12/99 12:40:42 PM Pacific Daylight Time,
hridens@xxxxxxxx writes:
<< Would anyone have a decent method of profit exits? It's about to drive
me batty. Maybe some indicator. I day trade but possibly some position
trading technique might work as well. Thanks in advance.
EP >>
Not sure what qualifies as "decent" but this general procedure might help.
Measure profit thresholds in units of Average True Range. When you have
achieved a profit threshold that meets your minimum profit criteria it is
time to tighten up your trailing stops so that you lock in most of the open
profits. As the profits get larger the stops should get tighter. Here is a
very simple example.
For a long position:
If the open profit based on the highest close is less than 3 ATRs use a 20
day low as your exit. Once you have 3 ATRS or more of profit then exit at
the ten day low. Once you have 5 ATRs of open profit then exit at the two
day low.
As you can see, the bigger the open profits the closer the trailing stop.
These particular numbers are just examples so you will need to alter them to
fit your style of trading and the general trendiness of the markets you are
trading.
I am very sceptical of any strategy that attempts to forecast the amount of
profit on any trade. I think you need to be flexible and willing to take
whatever the market is willing to give you. The general strategy I have
described should allow you to do that. You can take big profits when the
market gives them or you can take smaller ones if that is all there is.
Hope this helps. I have published a series of articles (Bulletins) about
exit strategies that can be found at
http://www.traderclub.com/discus/board.html
Chuck LeBeau
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