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> From: BrentinUtahsDixie <brente@xxxxxxxxxxxx>
> To: Real Traders Forum <realtraders@xxxxxxxxxxxx>; Group, Real Traders
2000 <Realtraders@xxxxxxxxxxxxx>
> Subject: Re: Exits? - or the Duck
> Date: Wednesday, July 28, 1999 5:45 PM
> >It is not the entry that makes a trader money, it is the exit.
>
> ***Exiting with a loss never made me much money.
No but exiting with a minimal loss is critical if you want to play again
tomorrow.
> *** The job of the entry is to position yourself for a winning instead of
a
> losing trade. If all you have are losing trades it doesn't matter how
well
> you control your losses.
Granted that you must have more winners than losers OR, preferably, larger
winners than losers but you will still lose money with 100% winning entries
if you don't have a consistent exit strategy.
> ***Defining your exit is fine as long as you know what you are doing.
> Probably flipping a coin would improve a good many traders exits as well.
Then I guess that you could argue that flipping a coin would improve a good
many traders entries as well.
> ***The main reason that novice trades fail is that they don't know what
they
> are doing and they are often under financed, fear and greed cause them to
> make bad decisions.
Definitely. Fear and greed probably don't cause many traders to make bad
entry decisions but they sure do lead to bad exits. That is where the
proper use of stops come in. And not just for novice traders. If you find
a profitable, experienced trader, you'll find a trader with well defined
consistent stops.
> *** I have heard this before but I've never seen anyone put money where
> their mouth is. I still say that they are equal in importance.
No way. Take a simple 10/20 simple moving average crossover system on
the S&P 500. It'll make money except for the periods where the market is
moving sideways. Add a trailing stop that is at least 1/2 the daily
volatility and watch what happens to profits and losses. A greater portion
of the profitable trades is retained and losses are capped.
> ***One famous and successful trader has said that you should always
assume
> that any trade that you enter is wrong until it is proven correct. That's
> not saying that where you enter is not important because if your entry is
> bad you wont have a chance to have the trade proven correct. His advise
> about getting out was to be quick about getting out of any trade that is
not
> proven correct.
Exactly - that's what stops are all about.
> ***Once proven correct however; he advises that you must press your
> advantage by adding to your trade in a prescribed way. He made his money
> mainly by sticking with the trend when it was going his way. Determining
> trend to the best of your ability is what you do before you enter a
trade,
> not after.
Pyramiding is a very profitable approach IF you have deep pockets and can
stay with a trade during normal market volatility. And this can be instant
ruin if you are in a market that can go limit against you for a number of
days such as any of the ags or softs. It's a highly risky strategy with a
huge payoff if you are right. Personally, I'm more interested in
minimizing risk rather than adding to it in the futures market.
Regards,
Mike
--
Aboard 35' Edel Cat "Moongate" in New Bern, NC
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