Day-Trading 2.0 for small traders
- Thread starter jjrvat
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Hi, trying to pull us out of the childish argument about TRO indicators and back to track. Price action.
I think your question is very good and the overall answer is yes, exits are determined according to price action.
The questions is how and this is where everyone's method come into place.
For example, you can set fixed targets that are based on the average size of waves. For example my fixed target for the ES is 1-1.25 PTS. this is not a random number it's based on price action and the normal size of waves in the ES (exept for super-volatility days like thursday where waves are minimum 4pts).
Other people might scale in & out according to support and resistence. I think that even if you have fixed targets you must always take into considration major support and resistence, and be flexible with your targets.
What's important for me to remember is that while you can
efford yourself a bit late entries that are based on price action your exits shouldn't be always based on pure price action becuase it might be too late, espcially in ranging days, you might want to check some of Iron Fist's earlier posts to see what I mean. I'll try to post some charts myself maybe later.
Thanks amitman.
Wouldn't the price targets be part of the money management?
If you have a SL of 1 then wouldn't the TP be 1, 1.5, 2.0, etc... to keep your expectancy profitable?
Wouldn't the price targets be part of the money management?
If you have a SL of 1 then wouldn't the TP be 1, 1.5, 2.0, etc... to keep your expectancy profitable?
of course TRO, price action and money mangament are parts of your trading plan. But what I do think that price action is always first, meaning that if your money mangament can't let a big stops that are right by price action then don't change your stops, either change your money managment or your instrument,
What I was saying that if you let price action determine your SL, then your TP should be a function of that SL.
Of course, you have to use your judgment while in a trade if you are profitable and price turns against you. You may have moved your SL up or you may just take your money off the table.
It depends if you are discretionary or purely mechanical.
Amitman, thank you for your message.
You are right. Wave size, next major/minor S/R, seeing how price acts when it hits S/R can all be used in determining when to exit.
Some people move the stop just under the previous HL as soon as a new HL forms in an uptrending market until they are stopped out. That is also a way to get out, trying to let the profits run. However, it may not be an appropriate method for scalping.
Scaling out is more comfortable psychologically. One may exit half of his position at first major/minor S/R and move the stop to BE. Yet, this method results in a reduced risk/reward.
I hope others in this forum share their insights, experiences regarding how to exit so we can learn
from each other and skim what suits best to our
own way of trading.
For me, exiting a trade is one of the most challenging
parts of trading.
Happy trading..
You are right. Wave size, next major/minor S/R, seeing how price acts when it hits S/R can all be used in determining when to exit.
Some people move the stop just under the previous HL as soon as a new HL forms in an uptrending market until they are stopped out. That is also a way to get out, trying to let the profits run. However, it may not be an appropriate method for scalping.
Scaling out is more comfortable psychologically. One may exit half of his position at first major/minor S/R and move the stop to BE. Yet, this method results in a reduced risk/reward.
I hope others in this forum share their insights, experiences regarding how to exit so we can learn
from each other and skim what suits best to our
own way of trading.
For me, exiting a trade is one of the most challenging
parts of trading.
Happy trading..
Bull$hit! Fixed targets in either direction are the sign of an amateur. Stop loss criteria is not a function of target price or vice versa.
Enough said.
St
Then enlighten us.
I like the following Trade Management strategy. It is not suitable for everybody but depends on taking trades at S/R (either breakouts or reversals)
Enter with 3 units. Initial catastrophic stop is 4-6 ticks based on volatility. Goal: never let the catastrophic stop get hit, exit based on price action if prices do not do what is expected within a reasonable period of time. 1st profit target is usually 4-8 ticks based on volatility. If 1st target is achieved, remove 1 unit and move stop on remaining 2 units to BE+1. 2nd target is closest S/R. If 2nd target is achieved remove 1 unit and trail stop on last unit. If at any time Price Action indicates the trade is not working out exit immediately.
The advantages of using this strategy are:
Very low initial risk, with experience, losses will usually be no more than 1 or 2 ticks.
Very low market risk because if 1st target is not achieved within a few minutes of entry, the trade is closed, and once 1st target is hit it becomes a "free trade."
Low risk means you can trade more volume (means higher profits).
Less psychological stress.
Once "free trade" status is achieved, trading software can help manage the trade so entering and managing more than 1 trade at a time is possible.
Enter with 3 units. Initial catastrophic stop is 4-6 ticks based on volatility. Goal: never let the catastrophic stop get hit, exit based on price action if prices do not do what is expected within a reasonable period of time. 1st profit target is usually 4-8 ticks based on volatility. If 1st target is achieved, remove 1 unit and move stop on remaining 2 units to BE+1. 2nd target is closest S/R. If 2nd target is achieved remove 1 unit and trail stop on last unit. If at any time Price Action indicates the trade is not working out exit immediately.
The advantages of using this strategy are:
Very low initial risk, with experience, losses will usually be no more than 1 or 2 ticks.
Very low market risk because if 1st target is not achieved within a few minutes of entry, the trade is closed, and once 1st target is hit it becomes a "free trade."
Low risk means you can trade more volume (means higher profits).
Less psychological stress.
Once "free trade" status is achieved, trading software can help manage the trade so entering and managing more than 1 trade at a time is possible.
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