Exiting Positions

[jack hershey]

Quote from greenleaf:


Thanks... What do you mean exactly?

You say you:

1. pick stocks
2. predict
3. you enter from reading tape not knowing the symbol or anything about it
you then add when asked:
a. you use stops
b. you target

4. you see profits fade back to nothing.
5. you close without fears
6. you remember people saying let profits run.

I see you saying:

1. I miss my targets all the time
2. I never go out on stops.

I observe:

It turns out you never pick stocks that run either.


Here's where you are:

you can't pick stocks that run
predicting is not very sharpe and you still do it
you can't pick targets and you set stops improperly
you have no way to monitor that is reasonable and helpful and can get you to see when the potential profit maxes out
you think you have no fear of getting out; what you have is a way to cansel all the time you spent and not make money.

Let me say to you this: You are in a bad place.

None of your repsondents told you any of this. they may for some reason think that you have something resembling an approach that works. They probably are where you are too.

 

[greenleaf]

Quote from gms:

Setting a target of a half run up turns out to give up lots of profit, then maybe you just want to exit when you see that $200-300 profit hit, or scale out some, or ride the rest of the way with a trailing stop, or sell some-trail stop the rest? Pick one method... or a few.

Thank you. I am going to look closely at the suggestions given forth by lindq, easyguru, and yourself. I will look at the charts of my recent trades and see how/if I could've done better by using a more specific target and/or scaling out. And peterf had a good point about it being practice.

 

[AAAintheBeltway]

Quote from greenleaf:

I am having a hard time adjusting my exits for the market. I've been doing very well picking stocks and predicting direction, where nearly all of my picks move in the way I want them to. The problem is exiting correctly.

Too many times lately, I have seen my profits erode. It really isn't a self-discipline thing because I am not afraid to close positions and have no attachment to the stocks (in fact, I trade off ticker symbols only and have no idea in many cases what the name of the company is, never mind the fundamentals). It's just a matter of whether my expectations are too high. I keep remembering all of these people and books who talk about letting profits run, but I am wondering if I should just take my $200-$300 and move on to the next trade instead of letting my $200-$300 turn into $50-$100.

Thanks for any advice,

Dickie Greenleaf

You leave a lot unsaid, such as your typical holding time and size of position. That makes it difficult to evaluate your question. A $100 profit on a 100 share position held for 30 minutes is a lot different than the same profit on a 1000 shares held a week.

In general, I would say a $200-300 profit on a daytrade of 1000 shares or less is not a bad profit. On a $15k account, they will add up. I wouldn't look at getting out with $50-100 as a defeat either. You are following a very basic principle of trading: never let a profit go to a loss. As you get more experience you will get a better feel for when you should let them run and when you should take the profit. Never feel bad about ringing the cash register though.

 

[OPTIONAL777]

Quote from greenleaf:


Thanks... What do you mean exactly?

Being in a "place" that Jack considers "bad" may be the best place to be.

Jack is insane, if you don't know that already yet. Try to figure out what he is saying, and you will go mad too.

Listen to people who make sense to you, not wackos like Jack the Ripper.

 

[greenleaf]

Quote from jack hershey:

I see you saying:

1. I miss my targets all the time
2. I never go out on stops.

I observe:

It turns out you never pick stocks that run either.

Here's where you are:

you can't pick stocks that run
predicting is not very sharpe and you still do it
you can't pick targets and you set stops improperly
you have no way to monitor that is reasonable and helpful and can get you to see when the potential profit maxes out
you think you have no fear of getting out; what you have is a way to cansel all the time you spent and not make money.

Let me say to you this: You are in a bad place.

None of your repsondents told you any of this. they may for some reason think that you have something resembling an approach that works. They probably are where you are too.

Thank you for your reply, Jack. I am looking through the cutting nature of your post to the real content to see if it applies.

I think the key is the absolutes in your assessments of my trading. I do not miss my targets all the time and never go out on stops, nor do I never pick stocks that run.

If I gave this impression, then I either misspoke or you misunderstood me.

I am a profitable trader, and am fully aware that I could get better if I fine tune my exit strategies.

That being said, I would very much welcome your suggestions on how to improve now that your initial analysis phase is complete. I would especially be interested in how to "monitor...to see when potential profit maxes out".

Thanks again,

Dickie Greenleaf

 

[greenleaf]

Quote from AAAintheBeltway:

You leave a lot unsaid, such as your typical holding time and size of position. That makes it difficult to evaluate your question. A $100 profit on a 100 share position held for 30 minutes is a lot different than the same profit on a 1000 shares held a week.

I appreciate your reply. I size my position based on this formula:

size = equity * risk / ADR

In my case, I use a risk % of .02. I then take the minimum shares of this, or 20% of my account buying power, or $30,000 right now (with margin). So generally, I'm in positions for 300 or 400 shares.

I hold my positions for a minimum of overnight (since I am a PDT victim) and preferably less than a week.

-- DG

 

[jack hershey]

Quote from greenleaf:


Thank you for your reply, Jack. I am looking through the cutting nature of your post to the real content to see if it applies.

I think the key is the absolutes in your assessments of my trading. I do not miss my targets all the time and never go out on stops, nor do I never pick stocks that run.

If I gave this impression, then I either misspoke or you misunderstood me.

I am a profitable trader, and am fully aware that I could get better if I fine tune my exit strategies.

That being said, I would very much welcome your suggestions on how to improve now that your initial analysis phase is complete. I would especially be interested in how to "monitor...to see when potential profit maxes out".

Thanks again,

Dickie Greenleaf

It is easy to see that you have a power positive orientation to getting the job done.

Natyrally, I would want to deal with your priorities first and then, in an iterative manner, we can address and improve you operations as you wish.

Because you trade the equities in the optimum time frame (over night to upwards of a week) there is a way we can get your exits nailed using that context. Either way, if you work during market hours or if you monitor during the day, we can do this with not much slippage.

I will illustrate what I say and I will just stick to fundamentals of TA.

 

[jack hershey]

You can monitor on a daily or a 30 min chart. I just use bar charts but some people here use candlesticks. Chart price and volume as the KISS way to do it.

Volume is the source of the signals you need. You want to anticipate the peaking of the price cycle in which you trade. You trade the short term cycle whose profitable 1/2 cycle takes about 6 to 8 days.

do not change your selecetion method but find out what the profit potential is before you go in. Use the attached form it is self explanatory.

Your money management then can be readjusted from what it is now. (I thanks AAA for getting you to help us out here). The ADR that you use and the % are arbitrary. I suggest that you use the potential of the profit cycle to better set up your money management.

Lets go for 1/2 of the potential profit. By going in late (you apparently do often) and by leaving a little early (you are now missing on both sides of peak with your wide ranging exits).

Replace the ADR with 1/2 the average potential profit as determined by the last five profit cycles in the last 6 months.

you will drop significantly the # of shares and therefore you can do a greater variety of stocks. This will accelerate your learning process on the kelw learning curve you now have.

Drop setting targets in price. Continue setting time targets as you presently are. In these times news is something else.


Without a price target, you will be able to focus on making 1/2 of the potential out there. Personally I do not trade stuff that has a potential less than 20% as determined on th attachment.

For exiting, I am going to keep it simple until you begin to make more money, then we can optimize here and there.

You know know the volume values that are associated with the stock. Prior to oyur entry, you will see the volume Reach it's lower range values. Call these Dry Up (DU value). I use this to determine entry before the price starts to move. My SEC citiations ar related to this. Entry is not on the table.

Say that you are in.

On daily charts you do this. Notice almost always the bar range for the peaking price covers two days. The first day the peak appears and the close is very near the peak. At this point you are very near best exit. Usually it is within two hours of the first peaking day.

More important you will see that after entry the volume increased to a value I call FRV (first rising volume) The FRV is very powerful for entries but that is not a priority as yet. After FRV establishes a non failure to BO (Break Out), you have a cycle start up that is going to resemble the prior five that qualified the stock.

Watching volume is more important than the price and its formations. Volume will increase (daily) to the peaking volume you recorded on the sheet. As it does, you know it will not be sustained and that the price will falter when that happens.

This max out in volume, is noticable immediately upon open on the second bar day of the price peak. You can do a prorata volume comparison (I do it on Qcharts automatically). As soon as the volume failure occurs, you are within an hour of the price peak. were I you I would exit at this point. It will be before 11:15 on this second day of price peaking. After this the bar will fill out longer on the lower side.

I use this approach personally but I am trading larger blocks up to my limit of 100,000 share per holding. I have to go out with partial fills. Therefore, I trade out going into the peak across it and if necessary after that too. If I leave something on the table I do not care.

Because of the way I write this may not be clear to you or others. I have been in the groove for so long, it is hard to put myself in the place of others and get the modern lingo straight.

I go for 10% a cycle and they last 6 to 8 days. Nowadays they are running shorter. My monthlies are running 30% now.

 

[jack hershey]

Quote from OPTIONAL777:



Being in a "place" that Jack considers "bad" may be the best place to be.

Jack is insane, if you don't know that already yet. Try to figure out what he is saying, and you will go mad too.

Listen to people who make sense to you, not wackos like Jack the Ripper.

don't read my last post, it will be painful for you.

 

[inandlong]

Wow Jack! Great post to greenleaf. If you're insane, I must be too because I thought your post was very well written. No offense to you by any means Opt 777. Jack indeed might be insane. But he sure makes sense to me.