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Rememebr the old saying....you should let your profits run and cut your
losses short. Setting a profit target in my opinion, is in violation of
these rules. I entered a "hypothetical" trading contest on AOL a few
months back and was chastised by one of the other contestants because my
short
term swing trades in the S&P had no stop. If my work said long...I stayed
long. If it said short then it reversed to short. This same contestant
was trading the S&P market as well and, while he had a stop, he alos had
profit targets. While his losses were smaller, my profits were much larger.
My goal is to beark even on most of my trades. Make a bit here, lose a
bit there but be on the train for the really big move. I don't think I am
alone when I say that the majority of my profits come from a minortiy of my
trades.
This is not a recommendation to trade "stopless". That is just they way I
work. But I do feel that you need to address the letting your profits run
angle as well. What got you into the market to start with? Is that
situation still present?
There is a lot of talk around here about being short Oct sugar. So your
"work" says sell. I, for one, would evaluate the market daily to see if
my work continued to say sell. If it did, then I would be short...if not I
am out.
I once new a fellow that never carried home a position with a loss. That
was his exit rule. He traded 50% retracements in a trending market and
NEVER took a loss home. That was his strongets trading rule and he made
money.
My advice is to know and follow the three "R"s...Risk, Reward and Reality.
If you
know the 3 R's on each trade...How much do you have to risk in this
trade...How much (from an historical perspective) do you stand to gain
(reward) and what are the chances of either happening (Reality). If you
can live with all three...TAKE THE TRADE! If not, wait for the next
opportunity.
Good Trading All
George Moldenhauer
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> > > From: A.J. Carisse <carisse@xxxxxxxxxxx>
> > > To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
> > > Subject: Re: Exits
> > > Date: Saturday, June 20, 1998 9:38 PM
> > >
> > > steven poser wrote:
> > >
> > > > Of course trailing stops can work too for those with an itchy
trigger
> > > > finger, but if what got you into the original trade is still valid,
> you
> > > > might want to look for a re-entry point (that has a decent risk
> > reward),
> > > > below your just exited level (assuming the original trade was a
long)
> > so
> > > > you have a chance to let the profits run after all.
> > >
> > > This is a very good point. Exiting a trade does not mean at all that
> one
> > is
> > > foregoing future positive movement. The trick is to look to exit
when
> > > conditions are temporarily unfavorable, and to look to re-enter if
and
> > when
> > > they become favorable again. This does not mean, however, that one
> ought
> > to
> > > only re-enter below one's exit (assuming we're long) - in fact, most
> > often a
> > > good re-entry will be above the exit - for instance, taking out the
> > > resistance it had previously failed at. One must look at the cost of
> > this
> > > style - commission plus slippage (the difference between the exit and
> > > re-entry) as insurance - protecting one's P/L level from slipping
> > further.
> > > This is a very good strategy overall when applied properly.
> > >
> > > Regards,
> > > A.J.
> >
>
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