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Michael,
Thanks for the post. I was especially interested in hearing your
comments re:setting profit objectives (No.3 below).
To me, a profit objective, determined before the trade is entered, is a
reasonable approach for setting risk/reward numbers, etc. A "plan" is a
good thing to have and this is the approach I generally follow. However,
as you say, the market couldn't care less about your objectives and,
knowing that, I will tend to reevaluate the objective in light of the
market's moves since postition entry. This has met with limited success;
some continue to move in the right direction and some don't.
Can you share what method(s) do you use for exits? or is it just a
streamofconsciousness thing?
Best Regards,
Bill Vedder
Michael Berger wrote:
> Just a few comments on the submission below:
>
> 1. When someone suggests "switch time frames ... snip
>
> 2. I don't know what Dr. Elder does now... snip
> 3. Price objectives.
> I have been trading futures for 30 years.... snip
>
> Not once in 20 + profitable years of trading have I
> used a profit objective. Nor have I ever met, or heard of a
> successful trader who has. On the other hand I have know
> many traders
> who never made much money because their profit objective was
> reached, and they missed the big move. And these same
> traders are often the type constantly picking a top or
> bottom. The only bottom this seems to pick is the equity in
> their account.
>
> The market cares little about your position, where you
> established it, what you think is an appropriate profit, or
> loss. There are countless strategies one could employ as to
> how to determine which way the market wants to move.
> Setting a profit objective has never been one of them.
>
> As a footnote, I see at the bottom of this posting
> is a system for sale that "contains sound logic that should
> work very well for picking bottoms in stocks." SHOULD
> work? Picking bottoms? I think I've said enough on this
> topic.
>
> Regards,
>
> ----- Original Message -----
> From: "Ed Kiers" <rokinseq@xxxxxxxxxx>
> To: "Jimmy Snowden" <jhsnowden@xxxxxxxxxxxxx>;
> <redeemed10@xxxxxxxxx>; "Omega" <omega-list@xxxxxxxxxx>
> Sent: Sunday, April 08, 2001 4:36 AM
> Subject: Fw: Bulletin 44 Switch Time Frames For Better Exits
>
> > As a contribution to the "different timeframes" posts.
> This is from Chuck Le
> > Beau's website.
> >
> > Ed Kiers
> >
> >
> > ----- Original Message -----
> > From: "The System Traders Club "
> <traderclub@xxxxxxxxxxxxxx>
> > To: <traderclub@xxxxxxxxxxxxxx>
> > Sent: Friday, April 06, 2001 7:35 AM
> > Subject: Bulletin 44 Switch Time Frames For Better Exits
> >
> >
> > ----------------------------------------------------------
> --
> > The Traderclub Forum: Traders Club Bulletins: Bulletin 44
> > Switch Time Frames For Better Exits
> > ----------------------------------------------------------
> --
> >
> > By webmaster (Admin) on Thursday, April 5, 2001 - 10:35
> pm:
> >
> > Bulletin #44
> >
> > Switch Time Frames For Better Exits
> > By Chuck LeBeau
> >
> > I just returned from a weeklong Trader's Camp hosted by
> Dr.
> > Alexander Elder in a beautiful island nation in the South
> > Pacific called Vanuatu. When I studied geography in school
> > many years ago, Vanuatu was known as the New Hebrides
> > islands. Vanuatu is located about 1,000 miles west of
> Fiji.
> >
> > If you have read Elder's excellent book, Trading For A
> > Living, you will recall that Dr. Elder is an advocate of
> > using multiple time frames for trading both stocks and
> > futures. For example, he suggests looking at the weekly
> > chart to make sure that the weekly trend is firmly up
> before
> > trading the long side of a market based on the daily chart
> > patterns. This approach makes good sense and I highly
> > recommend his book and his strategy.
> >
> > While listening to Dr. Elder explain his multiple time
> frame
> > strategy for entries, my thoughts wandered to the
> > application of his ideas to my favorite subject - exits.
> > One of my goals in trading is to find exit strategies that
> > do a good job of protecting open profits. One method of
> > accomplishing this goal is to simply move the daily stops
> > closer once a specific profit objective has been reached.
> > However, it might also make sense to simply switch to a
> > chart with a shorter time frame once we have reached a
> > reasonable profit objective.
> >
> > Here is an example of how such a strategy might work.
> Let's
> > say that we have been trading XYZ stock on an intermediate
> > term basis using daily charts. The trade is working out
> > very well and we now have six ATRs of open profit. (See
> > previous Bulletins for an explanation of how to use
> Average
> > True Range to set profit targets). Up to this point we
> have
> > been using our well-known Chandelier trailing stop placed
> at
> > 3 ATRs below the high point of the trade.
> >
> > However, now that we have reached our primary profit
> > objective we want to tighten up our stop to protect more
> of
> > our profits. We could reduce our Chandelier stop from 3
> ATRs
> > to 2 ATRs and continue using the daily bars or we could
> > switch our chart to one hour bars and continue to trail
> the
> > Chandelier exit at 3 ATRs based on the intraday one-hour
> > bars. The basic idea is to switch to a chart with a
> shorter
> > time frame once we have reached our profit objective.
> This
> > procedure should allow us to let our profits continue to
> run
> > but we would be protecting our open profits with much
> closer
> > stops by using the chart with a much shorter time frame.
> >
> > Combining our exit strategy with Dr. Elder's entry
> strategy
> > would provide the following sequence: for entries we first
> > examine the weekly chart and then use the daily chart to
> > trigger the trade. Once we are ready to exit our trade we
> > examine the daily chart and then trigger our exit using
> the
> > hourly chart.
> >
> > Of course this strategy would require some extra work as
> > well as the use of intraday data. The alternative would
> be
> > to simply reduce the number of ATRs used to hang the
> > Chandelier exit on the daily chart. Either way we do it,
> > the logic is to move our stops closer once we have
> achieved
> > a worthwhile trading profit.
> >
> > * * * * * * *
> > Notes On Bear Markets
> >
> > One of the best ways to gauge a bear market is to observe
> > the reaction to good and bad news. In a bear market the
> > averages go down even when the news is good. (For
> example,
> > look what happened the last time the Fed cut interest
> > rates.) We will know that the bear market is finally over
> > when we observe the market reacting favorably to good
> news.
> > In the meantime, we can take some consolation in the fact
> > that at the present rate of decline we will soon be at
> zero.
> > At least at that level we should be able to safely resume
> > trading stocks from the long side.
> >
> > * * * * * * *
> > April Systems Sale - Any Six Trading Systems for $1,000
> > (Save $500)
> >
> > Order your systems before April 15th to take advantage of
> > this special offer. The usual price of our trading
> systems
> > is $250 each so now is the time to save money if you were
> > planning on buying systems from us. All systems operate
> > using end of day data and all rules and code are fully
> > disclosed. Many members have purchased systems just to see
> > the logic and to get ideas they might use in developing
> > their own systems. For example, the Phoenix Bond system
> > contains sound logic that should work very well for
> picking
> > bottoms in stocks. Now there is an idea whose time has
> > come!
> >
> > * * * * * * *
> > Last Reminder - April Workshop in Los Angeles on April
> 14th
> > and 15th Go to the Home page of our web site at
> > www.traderclub.com or phone Chuck LeBeau at (310) 265-9776
> > for more information or reservations. (I lost some of my
> > e-mail messages while traveling so please phone me to
> > confirm your attendance if you plan on attending.)
> >
> > We will also be doing a Workshop with Dr. Elder in New
> York
> > in May. You can get more information on his web site at
> > http://www.elder.com
> >
> > * * * * * * *
> > Good luck and good trading. Lets hope this dreary bear
> > market ends soon.
> >
> > Don't forget to check the interesting discussions on our
> > Forum at http://www.traderclub.com/discus/board.html
> >
> > Our Forum pages on the web site contain very active and
> > interesting discussions about trading. New messages are
> > posted every day. Our Forum is rapidly becoming one of
> the
> > most active trading discussions on the web. You are
> invited
> > to participate.
> >
> > If you need more information send email to:
> >
> > chuck@xxxxxxxxxxxxxx
> >
> > Chuck Le Beau's System Traders Club
> > http://www.traderclub.com
> > ph 310-265-9776
> > fax 310-265-9556
> >
> > ----------------------------------------------------------
> --
> > DO NOT REPLY TO THIS MESSAGE! This is an automatic
> e-mail
> > message from the Traders Club Forum.
> >
> > Use this link to go directly to the discussion:
> > http://traderclub.com/cgi-bin/discus/show.cgi?107/1400
> >
> >
> >
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