Exit strategies

[Effkay]

Hi all,

Was just looking around at using and making trading strategies. I find that entry doesn't really seem to matter when I trade, but it is my exit that makes all the difference, so I thought I would throw this one out to you all.

What kind of strategies do you use to exit your trades? Is it predetermined or a trailing stop, or somethign else for that matter?

(and a poll for fun just in case I'm seen to be talking crap!)

 

[TheBramble]

Hmmmm....

Getting INTO a trade is a lot easier than exiting profitably. And there is some truth that good exit criteria will serve you better than any random entry criteria.


Why I voted 'equally important' is that as a percentages game, trading successfully demands that you have an edge at all times. Which means choosing just the best entry criteria and the first exit criteria.

 

[Salty Gibbon]

Knowing when to get out is of the utmost importance in both trading and another popular indoor ( and quite possibly outdoor ) pursuit.

 

[TheBramble]

Sorry effkay, just realised I hadn't answered the more specific part of your query.

I'll either exit if the initial StopLoss is hit, on a target being hit (if I'm using one), if a trailing stop (which is adjusted in line with momentum and volatility) is hit or if I spot a significant mood change on LII/T&S which is not in line with my current trade direction.

 

[Glenn]

Another way of looking at it statistically -

Example.

Let's say you get your Entries right 70% of the time
And you get your Exits right 70% of the time

The result is that the number of trades where you correctly enter and exit is... ..49%.

All depends on what your definitions of 'correct ' entry and exit are, but suggests that achievement of your overall plan is equally dependant on both.
Glenn

 

[Markus_H]

What kind of strategies do you use to exit your trades? Is it predetermined or a trailing stop, or somethign else for that matter?

Effkay, basically there are two different exit rules:

• Stop Loss Rules to protect your capital and
• Profit Taking Exits to realize your profits

Both exit rules can be expressed in four ways:

• A fixed dollar amount (e.g. $1,000)
• A percentage of the current price (e.g. 1% of the entry price)
• A percentage of the volatility (e.g. 50% of the average daily movement) or
• A time stop (e.g. exit after 3 days)

When using the same strategy on multiple market I don’t use a fixed dollar amount, because markets are too different. For example, natural gas changes an average of a few thousand dollars a day per contract; however, Eurodollars change an average of a few hundred dollars a day per contract. I like to balance and normalize this difference when developing a trading system and testing it on different markets.

That’s why I prefer to use percentages for stops and profit targets (e.g. 1% stop) or a volatility stop instead of a fixed dollar amount.

Many times applying a time stop will increase the performance of your strategy. A time stop gets you out of a trade if it is not moving in any direction, therefore freeing your capital for other trades.

Markus

 

[-oo0(GoldTrader)]

Markus rules

What Markus has said here about stops, is right on. I will be referring traders to his post. I use Wilders Parabolic Time/Price as a trailing stop, which believe it or not conforms generally to Markus rules.

I like to balance and normalize this difference when developing a trading system and testing it on different markets.

Parabolic trailing stops balance, normalizes, and equalizes markets. Parobolic uses percentages instead of fixed dollar amounts and is sensitive to volatility.

The amount the trailing stop moves up depends on the amount that prices move.

The general formula is adequate but it can be easily optimized if you have the perpetual data. You can easily increase or decrease the sensitivity of the indicator to respond to price changes.

As to the initial question of which is more important. All things being equal, because I average up winning trades, I have more contracts to sell than originally bought. Scaling in purchases, selling everything at one time. So, for me “Exit is more important than entry,” as it involves a bigger position.

 

[Effkay]

Just revisiting this thread and was wondering if other people were willing to share their exit rules?

 

[cj12]

For me 10 point target and a 10 point stop.works.(1.1ratio.)

im going to get the 1 to 3 ratio guys all screaming at me

 

[TheBramble]

For me 10 point target and a 10 point stop.works.(1.1ratio.)

im going to get the 1 to 3 ratio guys all screaming at me

Don't see why. As long as your W:L is up to it, a 1:1 would work (providing the risk management is tight).

Personally, it wouldn't work for me - but that's only because I trade crap setups...

 

[timsk]

-oo0(GoldTrader)
Speak up a little louder next time please - couldn't quite 'hear' you. So much so in fact that I didn't bother to even try and 'listen' to your post. My loss, I'm sure.

Tim.

 

[Effkay]

For me 10 point target and a 10 point stop.works.(1.1ratio.)

im going to get the 1 to 3 ratio guys all screaming at me

And u still make money?!! What setups do u trade??

 

[-oo0(GoldTrader)]

Exit strategy

Hybrid Thread

When in doubt, get out!​

​

​

​

​

 

[cj12]

Effkay

I start off with a 10 point target and 10 point loss.I tend to use a 2 min and 3 min chart. some times I dont wait for the 10 point stop to get hit, if I see 2 down bars there a 85 % chance i would get out, I also use a little gut feel.



sun

 

[StockCoach]

I have found the very best exits are based off of time, not price!

 

[RUDEBOY]

Exit or Entry? It doesn't matter, the two are the same. Your method covers the two? So you should not ask the boards, but yourself! Rude.

 

[SOCRATES]

Ha ! Ha ! Ha ! Marvellous, very funny post.

 

[RUDEBOY]

Thanks, Socs!

 

[RUDEBOY]

Effkay, remember! 'Reduce' before you 'introduce'? RB.