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Ah, come on A. J. give us something concrete to consider like, exit at 1.5
standard deviations of the mean or something like that. I think I heard 100
traders go "Huh". I'm sure that there is some good advise in there
somewhere.
Frankly, I don't know how you ever make a decision in that hazy, nebulous,
ambiguous world of yours.<g>
Just funning ya,
Brent
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> From: A.J. Carisse <carisse@xxxxxxxxxxx>
> To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> Subject: Re: exits
> Date: Saturday, June 20, 1998 2:01 PM
>
> Paul Cote wrote:
>
> > What I am starting to believe is
> > it is best to exit with a profit.
>
> I suppose it is <g>
>
> > This means taking smaller profits and
> > not letting any get away from you, it also does not mean trailing a
stop
> > because if you do, you will get an even smaller profit.
>
> Not sure about that. This will get you out early too much. One of the
> difficult things to properly realize is that the performance of an
> instrument does not bear any relationship to your specific entry. By
> concentrating on its current characteristics in relation to your entry
> point, your exits will suffer significantly. You must let the instrument
> tell you when it is time to exit. Simply put, this means - the point
when
> you can calculate that your capital would be better off in cash or in
> something else. Patterns, ranges, and TA can give us valuable input to
> where this point is, but one thing's for sure, it has nothing to do with
how
> little or much you've made so far on the trade. As far as moving stops
go,
> at least this is relevant, but they are still somewhat arbitrary, and at
> best are an over generalization (i.e. always exiting on an X retracement
> without regard to the peculiarities between patterns).
>
> This is a complex matter, and one's approach will vary according to what
is
> traded and one's preferred style. However, there are a couple of
principles
> that would apply universally. In all cases one should seek price
> confirmation for one's decisions. Ultimately, price patterns are king,
and
> it is wise to at least wait for a reasonable indication that the trading
is
> starting to go the wrong way. As well, while we need to spend a great
deal
> of effort on trying to formulate efficient exit strategies, all this is
> wasted if we don't stick with whatever rules we have formulated. This
isn't
> always easy in the heat of a trade, but I've found that more often than
not,
> sticking to our well thought out plans will prove to be more profitable.
>
> > So, what I am
> > thinking is to exit when the trade is moving in your favor and as long
> > as you made money, be happy.
>
> You'll be happier, though, if you can develop more efficient exits. In
> terms of risk, i've found that the old adage of giving your profitable
> trades a little more leeway (not too much of course) makes a lot of
sense.
> It's important, though, that you consider the option of re-entry into
your
> calculations, which is a tool that can allow you to tighten up your exits
a
> little more while still capturing a large part of the bigger moves.
>
> > I would like to hear from experienced traders on this philosophy. I
have
> > had many times where I have had 500 profit into a trade and did not
take
> > it only to have the trade fail to my stop. I am a one lot trader so it
> > is hard to scale in and out.
>
> I never let profitable trades go south. You need to tailor you exits a
> little more to performance, as for sure there isn't any way that one
should
> go from a good profit to a good size loss. Having separate objectives is
> usually the main culprit here, as is setting your exit criteria too
> loosely. Ideally, an exit strategy should be totally removed from your
> entry, and just focus on the thing being traded. As simple example,
let's
> say that you plan to exit whenever a set of MA's cross. So - either they
> cross, or you're still in the trade - regardless of your P/L at any point
> (which must be kept separate). This doesn't mean that objectives
shouldn't
> be considered - but in terms of the instrument's performance, and not
> yours. For instance, if you can sense that a meaningful retracement is
at
> hand, on the basis of its recent range of similar moves, and the price
> pattern suggests that it is underway, you could consider exiting, but
this
> still has nothing to do with where you entered.
>
> > I don't let 500 get away from me anymore, but then I am not letting
> > profits run either. I suppose a solution would be to build up the acct
> > with one lots and later use three lots to scale out and leave one on
for
> > the big pull.
>
> I'm not a big fan of this approach, simply because the odds are either
with
> the play or they aren't. Therefore, there is a right and wrong answer in
> terms of whether to hold or not, and the task is to try to determine
which
> is the case. Whenever you focus on P/L, you will tend to be
overcautious,
> and believe me, I've learned this the hard way. It is much better to
focus
> exclusively on the present (the short term odds), while putting the past
> behind you (where you entered, and thus your current P/L), and letting
the
> future take care of itself.
>
> Regards,
> A.J.
>
>
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