Any info re: Profit Taking Strategies?

[EqtTrdr]

Tried doing a search on here for some good info on finding the best profit taking method to suit your trading style and am unable to come up with anything.


I have a system that works, but I seem to be limiting myself by not taking profits as best I should imo

Any links/info on how to figure out a strategy is greatly appreciated

 

[murray t turtle]

Quote from EqtTrdr:

Tried doing a search on here for some good info on finding the best profit taking method to suit your trading style and am unable to come up with anything.


I have a system that works, but I seem to be limiting myself by not taking profits as best I should imo

Any links/info on how to figure out a strategy is greatly appreciated

==

Etrader;
a]Parabolic stop or psar

b]Each market is different, for sure you have more time with stocks than options

c]Also good question , it varies in stocks according to season, according to bull or bear, according to ETF or individual stock.

d] Good area to keeep AN EYE ON ;
tightened up a profit taking rule late last year , was giving a bit too much back.

Hope this helps.

 

[kut2k2]

-- according to the late, great Bruce Babcock :

Trade with the Trend.

Cut Loses Short.

Let Profits Run.

Manage Risk.

 

[Lefty62151]

Hello:
I get a bit dubious when people with 600+ posts ask about taking profits.

The way you decide profit taking is to study your market history. You look at the entry signal(s) your system generates and characterize the profit obtained on a per trade basis vs what you leave "on the table". You want to see if the unrealized profit displays a cyclic quality or is it approximately the same throughout the year. Either way you have important information that you can use. You then adjust your trade exit by modifying your stop or choosing one of several types of stops (parabolic, stop and reverse, etc), testing to see how each change affects your profitability.

The best example of how to test comes from the work of Donna McCormick and Jeff Katz titled "The Encyclopedia of Trading Strategies" Published by McGrawHill. The entire last part of the book details the experiments done to improve exits. In addition, the authors provide references to the software they used to do the testing.

Personally I use Excel and I test manually, but thats just me.

Good luck,
Lefty

 

[simsim]

Taking profits is like taking regulraly your vitamins. so take them frequently.

You have a reason to enter a trade, find out a reason to stay in a trade or get out of a trade.

 

[EqtTrdr]

was referring more to learning how to maximize profits..

I have a profitable system, but want to figure out if I am getting the most out of the trades I enter as they are discretionary and was looking to get some input and do some reading/research into how best to optimize my gains.

As far as I am concerned, . you can never stop learning or have "too much " profit.


thanks for replies

 

[easyrider]

Quote from Lefty62151:

Hello:
I get a bit dubious when people with 600+ posts ask about taking profits.

The way you decide profit taking is to study your market history. You look at the entry signal(s) your system generates and characterize the profit obtained on a per trade basis vs what you leave "on the table". You want to see if the unrealized profit displays a cyclic quality or is it approximately the same throughout the year. Either way you have important information that you can use. You then adjust your trade exit by modifying your stop or choosing one of several types of stops (parabolic, stop and reverse, etc), testing to see how each change affects your profitability.

The best example of how to test comes from the work of Donna McCormick and Jeff Katz titled "The Encyclopedia of Trading Strategies" Published by McGrawHill. The entire last part of the book details the experiments done to improve exits. In addition, the authors provide references to the software they used to do the testing.

Personally I use Excel and I test manually, but thats just me.

Good luck,
Lefty

This is excellent! Most people will not stick with anything long enough to gather sufficient statsistics, though.

 

[Nana Trader]

Quote from effkay:

A way of doing this is an optimaisation type of method, where based on your entry signal, you see how far the market moved in your favour before snapping back, and take the average as your target, you can do a similar thing for stops.
Hope this makes sense?

I can do above staff quicker than you have created
your website.

Optimizing stops and targets won't work, it's like
optimizing moving averages. Trends, pukllbacks
and reversals change all the time, and causes your
fixed parameter to fail. If it was this simple, everyone
could make money.

This is my opinion, does anyone disagree me?

 

[Lefty62151]

Hi:
I don't disagree. What you can optimize is the type of stop you use. Again I refer serious traders to Jeff and Donna's Book "The Encyclopedia...blah blah blah"). What they found was that you could improve your results (profits) by which type of stop you choose and/or by adapting your stop size to local volatility. I do this (adapt to volatility) by looking at the previous weeks volatility on Sunday, and projecting future volatility, taking into consideration important market events like economic reports. Also I vary stop size by time of day. One final issue is target market. If you look at specific markets you will see that they act differently. For instance in the bond market you have most professionals. This means that they are not going to pay up for a position (or sell at a discount) unless they have made a mistake. So vol is generally lower until a report hits and then it explodes. You have to be able to characterize the market you are trading.

Hope this helps

Lefty

 

[Nana Trader]

Quote from Lefty62151:

Hi:
I don't disagree. What you can optimize is the type of stop you use. Again I refer serious traders to Jeff and Donna's Book "The Encyclopedia...blah blah blah"). What they found was that you could improve your results (profits) by which type of stop you choose and/or by adapting your stop size to local volatility. I do this (adapt to volatility) by looking at the previous weeks volatility on Sunday, and projecting future volatility, taking into consideration important market events like economic reports. Also I vary stop size by time of day.
Lefty

Yes, you know what estimation to make about stops
and targets by optimizing, but can't automate.
Volitily changes and news, causes trend ,pullback,
reversals .. to change, so fixed and automizied stop
and target won't work.


-How you relate the previous week days volatility to
coming monday, tusday,...because market could have
been volitile last week, but this week not