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Jonathan & all,
I've come to my own conclusion that entries are easy... exits are the hard
part. My methodology (finally!) tells me when to get out if I'm wrong. The
real problem is taking profits. And, yes, you can go broke taking profits
if they are too small!
My methodology is trend following. I'd like to capture the whole move, but
nobody knows where the top will be. I'm hesitant to jump out too early and
miss a lot of the move , but equally hesitant to stay in and try to get out
as it's dropping. Once it crosses my moving average configuration, I'm out
regardless.
My current solution (I hope to keep learning and refining) is to look at the
big picture and use some of that information. If it's really overbought and
at the top of the channel when a buy signal comes along, I take what the
market will give me and get out at resistance. Likewise, if I'm trading a
reaction, I'll just take target a small retracement and take my profit
there.
If all the indexes are strong in the direction I'm trying to trade and my
signal is still open, I'll hang in a little longer than the first sign of
resistance, figuring momentum is at my back. If I get antsy and get out too
soon, I start looking for my re-entry.
Most often though, even though my signal is still open, I bail when I
encounter strong resistance, using bar failure or a topping MACD histogram
as confirmation. I try to use fib targets, but need to develop more
confidence and patience. It's easy to capture 1/4 point moves, but my
signals usually result in 1/2 to 1 point moves if I could be patient enough
to ride them from open to close. This is the psychological side of trading,
mixed with the money management sense to know you need to book the larger
profits.
Anyone else have any exit strategies they would like to share?
Linda
Swope's Mountain Photography
http://www.swopephoto.com
linda@xxxxxxxxxxxxxx
Climb the mountains & get their glad tidings: Peace will flow into you as
sunshine into flower; the winds will blow their freshness into you & storms
their energy, & cares will drop off you like autumn leaves. John Muir 1838 -
1914
From: Jonathan Stewart Dempster <aceit@xxxxxxxxxxxxxxx>
>Also regarding waiting for (low risk?)trades, using chart formations , i
> have usually worked off 3 minute bars, looking for short term moves using
>trend lines, spike lows/ highs and gap open reversals, entering is ok
>now as for the exit.. baring in mind the time scale (ie 3 min bars) i am
>looking to "take what the market gives" but it does seem that 10 - 20 % of
>the days range is realistic and acheivable by me,(but i wont be waiting for
>it to be delivered) so does anyone have any ideas on suitable exit (price
>exhaustion) indicators suitable for the short term moves, i have used
>momentum as the exit signal (ie waiting for a slight dip in it with one eye
>on the price action itself), i feel the basic methodology above is suited
>to me and im trying to fine tune it..
>
>Any thoughts on using Volume ?
>
>And yes i do understand what works for one doesn't neccessarily work for
>another, but its up to me to chew over any ideas decide whether or not it
>may have merit to me.
>
>Thanks in advance to those who give their time/ experience/ ideas.. J.S.D.
>
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