Exit methods for trend-traders

[ArchAngel]

Donchian channels are also often used for stop placement (i.e., set stop for a long below the lowest low of the N last bars)

Regardless of method, there's no one size fits all rule that works for all instruments in all timeframes - so you'll want to spend a reasonable amount of time analyzing your instruments/timeframes of choice to get a good feel of what condition(s) most often signal an end of a trend period (e.g., how many bars to use in the channel, which EMA period works most reliably, etc.).

Good luck.

 

[MAESTRO]

Theoretically speaking any counter trend method could be used to produce exits in a trending system. I used to work with simple MACD and used RSI for exits. It reliably produces good results.

 

[Cutten]

Quote from Andy62279:

thanks for the hint. I never saw it that way. I always approached exit strategy as in trying to make the most money possible. What I got from your statement is that if I have to have a reason for entry, then I have to have a reason to get out of a trade as well. By doing that I have an edge getting in and getting out of a trade.

I don't really agree with this. By being long, you are effectively doing the same as someone who is entering costlessly at the last tick. If there is no reason to enter at the present market price, then there is no reason to hold a position at the present market price. If there were a reason to be long right now, then that reason is also sufficient for a flat trader to enter right now.

 

[illiquid]

Think about it: does it really matter when YOU think the trend will break?

 

[Grob109]

Quote from illiquid:

Think about it: does it really matter when YOU think the trend will break?

Kewl!!

 

[jonnysharp]

Quote from illiquid:

Think about it: does it really matter when YOU think the trend will break?

bingo!

 

[kiwi_trader]

FWIW I use trend continuation signals to enter and trend ending signals to exit.

BUT ... I am asymetric wrt strength. I require a strong signal to enter and a weak signal to exit (so I don't just stop and reverse).

For me this effective.

 

[wwatson1]

Hi, I have picked the most recent trade in my journal to help show how I try and do things.

It is simple but I like it.

Would like to know if anyone else has the same kind of simplistic approach.

Here it is.........

 

[candletrader]

Quote from wwatson1:

Hi, I have picked the most recent trade in my journal to help show how I try and do things.

It is simple but I like it.

Would like to know if anyone else has the same kind of simplistic approach.

Here it is.........

Excellent approach...

 

[spect8or]

Quote from Cutten:

I don't really agree with this. By being long, you are effectively doing the same as someone who is entering costlessly at the last tick. If there is no reason to enter at the present market price, then there is no reason to hold a position at the present market price. If there were a reason to be long right now, then that reason is also sufficient for a flat trader to enter right now.

What if your system requires holding for a 10point gain, but you're only up 6 points? You would hold. But should someone flat looking at your system also enter the market now? Wouldn't the risk v rewards be out of whack?


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Also, X number of day highs/lows have been traditional reasons for exiting (and entering) trends. Not sure if they're still as widely used.