Exits................

[robster970]

So as someone who trades off price only I have developed an ok eye for when to enter a trade and am quite happy with this aspect of my trading.

Recently though, I've found my exits strategy which is fixed has not been working too well as volatility has increased.

When VIX was <20, a 4pt trailing stop worked nicely for me on ES. This obviously went completely crap when VIX hit 40 and I soon realised that I would have to loosen stops and work off a longer timeframe. So I moved to using a 2 bar trailing stop off H4 which worked well for one trade netting me 40+ pts and a week off. However the same technique was also responsible for watching a trade with a 30+ pt peak evaporate to scratch overnight.

There is lots of info on trade entries out there but little on exits with the exception of some stuff associated with Van Tharp that I have seen. I'm rapidly coming to the conlusion that I need to develop a flexible and market based approach to exits as I've developed for entries over the last 2 years.

I'm wondering just how many people out there do this or whether the norm is static exit strategies. I'm most interested in the views of people who discretionary trade rather than use indicators or signals.

So kids, what works for you?

 

[wackypete2]

If you are 3 or 4 points in profit just use a simple 10ma as your stop loss. If price moves 1 point below the ma or a candle closes below the ma then exit. If you find that's too tight then change to a 20ma. The 10 and 20 are good because a lot of traders look at them and when price approaches they want action (right or wrong, who cares, use it to your advantage!). You'll find price rarely hovers around them. Either you get an almost perfect bounce or price will drive through hard. Try looking at a few of your recent trades, good and bad, to see if this would suit you.

Peter

 

[meanreversion]

Position sizing and exits are more important than entries. There's another thread out there on random entry systems.. I've backtested a system which randomly enters a position, but exits based on a trailing stop loss, and it makes (a little) money over time. If you throw in a trend filter to the entry, but still enter based on a coin flip (i.e., doesn't matter where price is, buy at the close if market is in uptrend or sell if in downtrend if heads, do nothing for tails), this system can be surprisingly successful.

I think it's one of the reasons "95 pct" of retail traders lose money, they focus purely on the entry and don't analyse their position size or think about how to get out.

I use a trailing stop based on highest high/lowest low for n number of days (the Turtle method) but my system is quite medium term (winning trades usually last a couple of months). For shorter time frames, I'd suggest looking at the Chandelier approach, for a long the stop is 3 ATR below the highest high for the last 10 bars, that type of thing.

You will always give money when the trend reverses, but it can keep you in for a long time.

 

[meanreversion]

For an initial trade, I usually place my stop 1 daily ATR below/above the entry. This helps avoid the noise, and obviously the stop distance alters with volatility.

 

[kimo'sabby]

So as someone who trades off price only I have developed an ok eye for when to enter a trade and am quite happy with this aspect of my trading.

Recently though, I've found my exits strategy which is fixed has not been working too well as volatility has increased.

When VIX was <20, a 4pt trailing stop worked nicely for me on ES. This obviously went completely crap when VIX hit 40 and I soon realised that I would have to loosen stops and work off a longer timeframe. So I moved to using a 2 bar trailing stop off H4 which worked well for one trade netting me 40+ pts and a week off. However the same technique was also responsible for watching a trade with a 30+ pt peak evaporate to scratch overnight.

There is lots of info on trade entries out there but little on exits with the exception of some stuff associated with Van Tharp that I have seen. I'm rapidly coming to the conlusion that I need to develop a flexible and market based approach to exits as I've developed for entries over the last 2 years.

I'm wondering just how many people out there do this or whether the norm is static exit strategies. I'm most interested in the views of people who discretionary trade rather than use indicators or signals.

So kids, what works for you?

I can only go off what you have said, and i'm thinking you should have already wrapped this issue up.

What do you want to do with your dough?

Do you want to create a fulltime endeavour?

Do you want to beat the the bank and still hold down a job full-time/part-time?

Entries and exits are based on market moves exhausting themselves, so your chosen time-frame is the key to your success which ever way you want to play it.

There is a saying, "what gets you in will also get you out".

 

[robster970]

I know what you mean about the focus on entry. All the entry is for me is a mechanism for basically mitigating and minimising risk on through timing based upon price action. Most of my basic analysis is around the 1 day, H4 and H1 activity but M5 is what I use to get in. Sometimes when circumstances dictate that price can come to me, my entries are quite passive and relaxed. On other occassions when I know I can press into a trade and be more aggressive, I can use intraday levels to get in.

What has become apparent to me probably over the last 2-3months though is that you don't take money off the table if your exit mechanism cannot handle varying market conditions and this is what upsided me in the last couple of weeks. The whole initial stop thing for me is irrelevant because of the nature of the way I trade. Taking money off the table appears to be a relative weakness.

I'd not considered using MA's at all - it just never seemed to register that they could be used as an exit mechanism. I've just looked at the last month's trades and the 20MA on H4 looks more like my bag. I don't know about the Chandelier method and I'll do some digging.

Incidentally, does anyone on here actually use price action alone to determine an exit?

 

[robster970]

I can only go off what you have said, and i'm thinking you should have already wrapped this issue up.

......

Entries and exits are based on market moves exhausting themselves, so your chosen time-frame is the key to your success which ever way you want to play it.

There is a saying, "what gets you in will also get you out".

I thought I had it wrapped up until ES started it's drop from 1220 and VIX started to shoot up. It made me see that one side of my trading is flexible and based upon mkt conditions and the other is just formulaic. It just made me realise that my exits can be improved significantly. I've still got lots to learn.

Ultimately I'd like to trade full time. I do it part time currently and it pays for holidays, mooring fees, frippery stuff generally. I would like to do it full time because (a) I really, really enjoy it and find the challenges trading poses very satisfying to engage in, (b) eventually get some time back to do other things with my life and (c) the dough.

Your last two statements have provided a moment of clarity. Sometimes it's easy to get lost in yourself and sometimes a little bit of help can set you straight.

cheers boys.

 

[meanreversion]

I'd try to make the system as simple as possible. I think my system is fairly simple but I still manage to f-ck it up from time to time.

I'd strongly suggest reading the Van Tharp book (Trade your way to....), there's a lot of stuff on exits in there. In fact I think it's the no. 1 must read book for any trader.

 

[kimo'sabby]

I thought I had it wrapped up until ES started it's drop from 1220 and VIX started to shoot up. It made me see that one side of my trading is flexible and based upon mkt conditions and the other is just formulaic. It just made me realise that my exits can be improved significantly. I've still got lots to learn.

Ultimately I'd like to trade full time. I do it part time currently and it pays for holidays, mooring fees, frippery stuff generally. I would like to do it full time because (a) I really, really enjoy it and find the challenges trading poses very satisfying to engage in, (b) eventually get some time back to do other things with my life and (c) the dough.

Your last two statements have provided a moment of clarity. Sometimes it's easy to get lost in yourself and sometimes a little bit of help can set you straight.

cheers boys.

Listen mate,

It's easy for anyone to come on here and give an opinion, you have put yourself and your problems on the line for us all to see, fair play to you.

At this very moment in time, what are your aspirations in terms of what you want out of the market?......Do not answer this question in public, but think about it.

If you are generally thinking about moving your wealth into the future with a view to beating the bank then the higher TFs will do.

Exits?

These can be based on numerous factors, intra, swing, position, all of these TFs need a forward plan in terms of how you are going to get the most out of what you see.

What i have said may seem a little vague, there is a good reason for this, i don't know how you react to what you see.

From what i can see, you seem comfortable with your trading and you make some money,......all you can do is refine what you already have in a way that suits you.



Good trading.

 

[robster970]

This site has a lot of horse**** about it and is quite entertaining but when you need some quality answers to problems, I can always rely on posting stuff like this up and know that I'm likely to get some good advice and opinion. Like I said, thanks boys.

Incidentally kimo, you've also made me realise there is something else going on for me which is a growing frustration of not taking intraday trades when I'm tuned into intraday as a consequence of trade planning.

Example. Yesterday, ES was flat overnight during Nikkei and European trading. New pre-market high was created so that told me there was still strength there but was not sure whether it would continue upwards or we were getting ready for a pullback.

2.30pm kicks off, pre-market low provided support and then price was rejected by Thursday's RTH close. So at this point I knew two things:

1) This was likely to be the start of a pullback so I would wait until it got to 1080 or 1060 area to the gap close from Tuesday RTH.

2) There is an intraday trading opportunity here from where price got rejected down to the entry for the H4 trade long.

I did go long at 1080ish though when everybody sold off to fulfil the H4 trade.

I don't take those intraday trades right now but when the structure of the day is quite evident, I have no idea why I don't.

The more screen time I get, the more gets revealed to me and the more opportunities appear to present themselves.

Anyway, this is a whole other thing............

 

[kimo'sabby]

This site has a lot of horse**** about it and is quite entertaining but when you need some quality answers to problems, I can always rely on posting stuff like this up and know that I'm likely to get some good advice and opinion. Like I said, thanks boys.

Incidentally kimo, you've also made me realise there is something else going on for me which is a growing frustration of not taking intraday trades when I'm tuned into intraday as a consequence of trade planning.

Example. Yesterday, ES was flat overnight during Nikkei and European trading. New pre-market high was created so that told me there was still strength there but was not sure whether it would continue upwards or we were getting ready for a pullback.

2.30pm kicks off, pre-market low provided support and then price was rejected by Thursday's RTH close. So at this point I knew two things:

1) This was likely to be the start of a pullback so I would wait until it got to 1080 or 1060 area to the gap close from Tuesday RTH.

2) There is an intraday trading opportunity here from where price got rejected down to the entry for the H4 trade long.

I did go long at 1080ish though when everybody sold off to fulfil the H4 trade.

I don't take those intraday trades right now but when the structure of the day is quite evident, I have no idea why I don't.

The more screen time I get, the more gets revealed to me and the more opportunities appear to present themselves.

Anyway, this is a whole other thing............

Do the right thing for yourself mate, i never told you anything, you already knew it.


Sincerely,


Good trading.

 

[Black Swan]

I can only go off what you have said, and i'm thinking you should have already wrapped this issue up.

What do you want to do with your dough?

Do you want to create a fulltime endeavour?

Do you want to beat the the bank and still hold down a job full-time/part-time?

Entries and exits are based on market moves exhausting themselves, so your chosen time-frame is the key to your success which ever way you want to play it.

There is a saying, "what gets you in will also get you out".

Brilliant, give the man a prize...on reflection he probably doesn't need one...

 

[Chartsy]

Position sizing and exits are more important than entries. There's another thread out there on random entry systems.. I've backtested a system which randomly enters a position, but exits based on a trailing stop loss, and it makes (a little) money over time. If you throw in a trend filter to the entry, but still enter based on a coin flip (i.e., doesn't matter where price is, buy at the close if market is in uptrend or sell if in downtrend if heads, do nothing for tails), this system can be surprisingly successful.

I think it's one of the reasons "95 pct" of retail traders lose money, they focus purely on the entry and don't analyse their position size or think about how to get out.

I use a trailing stop based on highest high/lowest low for n number of days (the Turtle method) but my system is quite medium term (winning trades usually last a couple of months). For shorter time frames, I'd suggest looking at the Chandelier approach, for a long the stop is 3 ATR below the highest high for the last 10 bars, that type of thing.

You will always give money when the trend reverses, but it can keep you in for a long time.

i just use a 3ATR trailing stop, trying to ride the whole thing. Robster i think just using a multiple of ATR as a trailing stop is better than a set points amount imo. take 2006/2007, eurusd may have had an ATR of 70-100 pips on average now it's at 200+. The thing is that volatility comes in and out so using a volatility based stop should, in theory keep you safe from volatility trailing stop imo!

 

[robster970]

I'm going to have a go with the 20MA for 3 months when mkt is trending and see how I get on. I agree with you Chartsy, the fixed stop size is bonkers. I don't know why I never thought to correct this in the cold light of day.

 

[Chartsy]

this is for ES isn't it?

 

[robster970]

Yes - why Chartsy?

20MA off H4 chart and any candle that closes through it signals an exit. I had a right good look at this last night whilst Eurovision was on and the Mrs was out.

 

[Chartsy]

ha graham norton was funny eh? just wondering , i think ES and pretty much every other well known indices (FTSE/DJIA) have some of the cleanest trends ever!

Nothing trends like my babe the eurusd tho

edit: out of interest does that skype futures room still exist? not that i want to join just curious!

 

[robster970]

It was pretty funny wasn't it. I reckon it would have been better if we'd come last and got 0 points as well. UK we're truly ****.

I've not been in the Skype room since March time as I needed to get my head down and do some work in my day job rather than getting lulzy in there. It was more geared towards day trading than anything else but I picked up quite a lot of useful stuff when I was in there, especially from a guy called Hunter who'd been traidng for about 7 years. Gladys is conspicuous by his absence too.

E2A: This will interest Mean - Hunter and I did some stuff with random entries and being able to make money based upon a coin toss, so I totally buy the idea that entries aren't everything as we tried it about a dozen times where I would say when and whether short/long and he would pick timing within say the next 30secs to 1min, get an entry, get out and still have a bit of cash left after the commission

 

[Chartsy]

It was pretty funny wasn't it. I reckon it would have been better if we'd come last and got 0 points as well. UK we're truly ****.

I've not been in the Skype room since March time as I needed to get my head down and do some work in my day job rather than getting lulzy in there. It was more geared towards day trading than anything else but I picked up quite a lot of useful stuff when I was in there, especially from a guy called Hunter who'd been traidng for about 7 years. Gladys is conspicuous by his absence too.

That's why i ask, he's disappeared for two months! i remember him saying to me a long time ago he's taking a break from trading, but he didn't tell anyone when he left so who knows

 

[robster970]

That's why i ask, he's disappeared for two months! i remember him saying to me a long time ago he's taking a break from trading, but he didn't tell anyone when he left so who knows

I knew he was not going to post on here much as he was developing some stuff and doing more in different markets than just scalping ES. He was getting quite serious about it so I'm a little suprised he would take 2 months off. Then again he is a bag of contradictions in the most pleasant sense.