Exit methods for trend-traders
- Thread starter Cutten
- Start date
I so much prefer to trade the short side then the long side, market love to drop like a rock cause either so many believe it is Un-American to sell short or they simple can't figure out how to sell an instrument, so less open interest, and at some point the bigger brokerage houses start taking profit cause they were selling as markets moved higher. The short side has nice clearer, to me, areas to add-on more signals, so fewer of false moves. Whereas the market takes twice as long to go up allowing so many to make markets make weird wiggles.
All my testing thru the years have said the same thing to me, so I don't change it. I have only one target which is a good but probably area a instrument should go 40% of the time and I take half position off, and the rest I leave at true breakeven plus a small amount for fees and whatever I lost on hedges, that stop, except for rollovers in commodities, I never touch, sometimes years go by and keep that stop. Trailing stops, stops any chance of huge moves, one big day down cause of CEO or weather changes and the market can violently change for a few hours and then resume trend direction and end up with huge gain, and that little burp made you get stopped out. Some of the biggest gains from long term trading, would never have made if I used trailing stops. Long term is like check position on weekend and use weekly charts. Sitting on hands not exciting but usually more bountiful.
Bingo. That's why I mentioned bull markets. You can randomize the entries or the exits, you'll make money either way. But not as much as you could make using systematic timing throughout the trades.
Entries matter. Exits matter. MM matters. Everything you do in a trade matters. So randomize nothing.
you will never know if after the current moment there will be a bull/ bear/ range bound market.even our best entries are not better than random entries.the best traders win rate is 30-40%.
No, random entries work because there is something called "trend" in every freely traded financial market, and with the right exit strategy you can capture a good portion of that trend, even if the entries are totally random. This non-randomness of the market is what allows the traders to make money.
The trend itself could be up or down it does not matter here.
No exit-method for trend traders is ever going to be completely reliable: given the multiplicity of exit-parameters available, there will always be many specific trades for which using different exit-parameters would have worked out better with hindsight.
What helps, I think, is to acknowledge this in advance, and just choose a reasonably sensible method which suits your trading-style and frequency, knowing that it will often be sub-optimal.
A method which I've used fairly successfully on a variety of time-frames is to exit a trend-following trade when the price crosses a 20-period Kijun Sen line (from the Ichimoku Kinko Hyo indicator-set) displaced 3 periods to the right - in other words, when the price crosses a horizontal line at the level of wherever the Kijun Sen line was, 3 bars/candles earlier.
It sounds a little complicated, perhaps, but it seems to work pretty well, overall, as simple exit rules go.
What helps, I think, is to acknowledge this in advance, and just choose a reasonably sensible method which suits your trading-style and frequency, knowing that it will often be sub-optimal.
A method which I've used fairly successfully on a variety of time-frames is to exit a trend-following trade when the price crosses a 20-period Kijun Sen line (from the Ichimoku Kinko Hyo indicator-set) displaced 3 periods to the right - in other words, when the price crosses a horizontal line at the level of wherever the Kijun Sen line was, 3 bars/candles earlier.
It sounds a little complicated, perhaps, but it seems to work pretty well, overall, as simple exit rules go.
