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I couldn't agree more about having a plan before entering any trade that
includes both the risk and reward side. But as far as the market not caring
about your profit objectives, I couldn't disagree more.
IMO your objectives should in large part be based upon previous price action
where the market has determined S/R levels. Therefore the market will
"care" a great deal about your objectives and especially so at certain key
levels. Other factors can influence a trade including environmental items
such as volatility, strength of trend (if any), strength/weakness of the
tape, etc., but Price and Price action should be the primary focus. And you
won't be able to see this very clearly (if at all) using 1-minute or smaller
charts.
In terms of how long to hold a trade, again I let the price action make that
decision for me whenever possible. As long as the trade "isn't doing
anything wrong", - i.e. if long is the market making higher highs and higher
lows; is resistance being broken and then acting as support, etc., then I
will try and stay with it and possibly add to the position.
Some judgment is required when trading but Price can tell you a great deal
if you learn to understand what the chart is telling you.
Bob Heisler
www.rjhtrading.com
----- Original Message -----
From: "Bill Vedder" <bved01@xxxxxxx>
To: "Michael Berger" <mberger@xxxxxxxx>
Cc: "OmegaList" <omega-list@xxxxxxxxxx>
Sent: Sunday, April 08, 2001 5:38 PM
Subject: Re: Bulletin 44 Switch Time Frames For Better Exits
> 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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