ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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I am asking this as your entry is based on short grails on short term charts, correct? If you look at the hourly chart, you would also see grails, but they are long ones and price being at the bottom of channel. Of course, that is not to say that your position is incorrect, but I would have had a predetermined PT as well as a stop, especially when the odds of an upside move are higher than the downside. All IMHO.
well this second trade illustrates what i was talking about in an earlier post. if i wait until i see an opposite grail then i have to give back most of the profits on the trade. i am thinking that for shorter time frames it's better to use a profit target. what do you guys think? is my observation incorrect because it's based on a small sample?
Code:
entry exit pnl
short 1379.25 1381.00 -1.75
short 1380.50 1380.00 0.50
*all papertradesBuy1sell2,
Ok, I can generally agree with what you are saying about taking whole profits and not scaling out as I've given it thought and run through my past experiences and tested out different scenarios logically (although I initially did not agree).
However, there are 1 or 2 scenarios where I do not know how to play it (or I feel where it may be an inferior method) That's why I'm asking for advise on how to handle them. Hopefully I will be able to ask clearly. Its very clear in my head but putting it down on paper is another thing altogether
It has to do with your below quote on short trade:
"..... If I see an obvious bullish divergence on hourly charts, I may consider taking profits and reentering at a higher price, but it needs to be very very obvious"
The problem is at times one may not be able to get a better price. I will use an example of long stock here (ie bullish bias)
Scenario 1
I am long stock here (eg: swing trade for a few days) and I see that currently there may be a shorter term reversal point. I decided to take all my profits in the hopes of reentering again (full position as before) at a lower price as I'm still bullish.
[Eg: bullish that stocks will rise the next few days (my original stop loss is at $19.8), however in between the few days there may be some short term (eg: a few hours or 1 day etc) where price will drop a bit before continuing its ascend]
The complications arise when the below occur (ie the price where one reenters the buy stock is worse than where one took the profits):
A) Before I can buy at a lower price from the price that I sold (eg: $24), the price starts to take off. (That means the reversal was much shorter lived than expected). As a result, I will have to reenter again at a higher price(eg: $24.3) than what I exited (which means my profits would have been better if I did not try to exit at what I thought was the reversal point).
Qn: I suspect that the right thing to do is to enter the full position at $24.3 with my stop loss at the original point ie $19.8. That means that I may have 'unrealised loss' and realised profit (instead of all unrealised profit if I did not exit at all).
Also, I will get less profit (lesser by 30 cents) than if I have not exited and reentered the position. The reason for this is because I misread what the market was telling me
B) Same as above except that the market/stock shoots up.
Qn : Do I reenter full position (as my bullish bias has not changed) at this much lousier price (eg: $24.5) or wait for a retrace.
(Sometimes the retrace is at a lousier price eg: $25 than if I were to reenter when price shoots up ie $24.5)
My stop loss will still be the old (original) point of $19.8
These scenarios are what I have encountered where I will get a lousier result than if I were to take partial profits off. (Cases like spikes etc where taking full profits and reentering again makes sense as generally one will get a better price). As we cannot accurately predict all the time, the above 2 scenarios are very real. How would one go about handling it? Thanks.
The only solution I can think of is that if one is good in judging that its a short term reversal and have a good track record of reentering at a better price, then one should take the whole profits off and reentering the full position again (as bullish bias has not changed).
However, if one do not have that good a judgement or the scenario is not very clear, then scaling out or not trying to take advantage of the short term reversal (ie do not exit and reenter again) is the answer.
Ok, I can generally agree with what you are saying about taking whole profits and not scaling out as I've given it thought and run through my past experiences and tested out different scenarios logically (although I initially did not agree).
However, there are 1 or 2 scenarios where I do not know how to play it (or I feel where it may be an inferior method) That's why I'm asking for advise on how to handle them. Hopefully I will be able to ask clearly. Its very clear in my head but putting it down on paper is another thing altogether
It has to do with your below quote on short trade:
"..... If I see an obvious bullish divergence on hourly charts, I may consider taking profits and reentering at a higher price, but it needs to be very very obvious"
The problem is at times one may not be able to get a better price. I will use an example of long stock here (ie bullish bias)
Scenario 1
I am long stock here (eg: swing trade for a few days) and I see that currently there may be a shorter term reversal point. I decided to take all my profits in the hopes of reentering again (full position as before) at a lower price as I'm still bullish.
[Eg: bullish that stocks will rise the next few days (my original stop loss is at $19.8), however in between the few days there may be some short term (eg: a few hours or 1 day etc) where price will drop a bit before continuing its ascend]
The complications arise when the below occur (ie the price where one reenters the buy stock is worse than where one took the profits):
A) Before I can buy at a lower price from the price that I sold (eg: $24), the price starts to take off. (That means the reversal was much shorter lived than expected). As a result, I will have to reenter again at a higher price(eg: $24.3) than what I exited (which means my profits would have been better if I did not try to exit at what I thought was the reversal point).
Qn: I suspect that the right thing to do is to enter the full position at $24.3 with my stop loss at the original point ie $19.8. That means that I may have 'unrealised loss' and realised profit (instead of all unrealised profit if I did not exit at all).
Also, I will get less profit (lesser by 30 cents) than if I have not exited and reentered the position. The reason for this is because I misread what the market was telling me
B) Same as above except that the market/stock shoots up.
Qn : Do I reenter full position (as my bullish bias has not changed) at this much lousier price (eg: $24.5) or wait for a retrace.
(Sometimes the retrace is at a lousier price eg: $25 than if I were to reenter when price shoots up ie $24.5)
My stop loss will still be the old (original) point of $19.8
These scenarios are what I have encountered where I will get a lousier result than if I were to take partial profits off. (Cases like spikes etc where taking full profits and reentering again makes sense as generally one will get a better price). As we cannot accurately predict all the time, the above 2 scenarios are very real. How would one go about handling it? Thanks.
The only solution I can think of is that if one is good in judging that its a short term reversal and have a good track record of reentering at a better price, then one should take the whole profits off and reentering the full position again (as bullish bias has not changed).
However, if one do not have that good a judgement or the scenario is not very clear, then scaling out or not trying to take advantage of the short term reversal (ie do not exit and reenter again) is the answer.
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