Not trying to have an all or nothing solution may not be theoretically optimal, but seems to work pretty well. By exiting half your position at a profit when you get near a key resistance level (or even if you just perceive momentum evaporating) you can lock in some profit (in case there's no continuing trend - which is a good possibility in choppy markets) but can now more reasonably (and calmly) risk leaving a wider stop on the remaining portion to maximize your chance of riding a continuation move if one develops without getting stopped out prematurely. You can then trail stops on that second half at whatever distance makes sense to you, finally either being stopped out or exiting manually if you seem to be running into heavy resistance.
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Exits-- targets vs. trailing stops
- Thread starter monee
- Start date
Monee, I screwed up. After reading your reply, I went back and re-read the original post. I thought the hold time was for multiple days not daytrading. For daytrading I have to put on the whole position right away and go for a target. Only exception is possible trend days when I do second and third entries on retracements to a 20 period MA on the 5 min. chart. All exits if not stopped are MOC.
I don't think you'd have the time to do fractional entries and get the risk:reward ratios right doing daytrading.
The stop I was suggesting for the second unit was at the original entry price for the first unit (breakeven). The idea is to maintain the same risk while providing an opportunity to have a larger position on when the big trending moves happen (outside a normal probability distribution).
I don't think you'd have the time to do fractional entries and get the risk:reward ratios right doing daytrading.
The stop I was suggesting for the second unit was at the original entry price for the first unit (breakeven). The idea is to maintain the same risk while providing an opportunity to have a larger position on when the big trending moves happen (outside a normal probability distribution).
Arch and Acary.
I may try the idea of scaling out, with a stop slightly below the first exit.If the move continues and accelerates a trendline break seems to work well for exiting,many times if the move is steep, to reach the 10 or 20 period moving averages would require a large giveback of open profit.
My feeling is as ones account balance grows it is easier to"have faith" and hold on for the larger moves,but I do realize it's a catch 22 situation if you don't hang on for the larger moves the account balance won't grow.
A lot of the intraday exits are influenced by the daily's.
If the dailys are at a key level and you are in a profitable position you should hold on.The Druckenmiller quote "It takes courage to be a pig " really applies then.
Acrary ,your 20 period ma on the e-mini s&p friday rode the mrkt all the way up!!
Since I trade mostly from the long side was used to grabbing small moves lately, since I was always trading contratrend.
We will see what the market does from here.Drew a downtrend line from the august 27 peak on the s&p and friday it hit it and backed off ,but we shall see.
I may try the idea of scaling out, with a stop slightly below the first exit.If the move continues and accelerates a trendline break seems to work well for exiting,many times if the move is steep, to reach the 10 or 20 period moving averages would require a large giveback of open profit.
My feeling is as ones account balance grows it is easier to"have faith" and hold on for the larger moves,but I do realize it's a catch 22 situation if you don't hang on for the larger moves the account balance won't grow.
A lot of the intraday exits are influenced by the daily's.
If the dailys are at a key level and you are in a profitable position you should hold on.The Druckenmiller quote "It takes courage to be a pig " really applies then.
Acrary ,your 20 period ma on the e-mini s&p friday rode the mrkt all the way up!!
Since I trade mostly from the long side was used to grabbing small moves lately, since I was always trading contratrend.
We will see what the market does from here.Drew a downtrend line from the august 27 peak on the s&p and friday it hit it and backed off ,but we shall see.
This is my money mgmt technique for swing trading... similar to Dave Landry's (excellent trader) from tradingmarkets.com
Take loss at 1.5* atr(2). When in profit of 1R scale out %30-50 (exact amount discretionary but systematic when applied) then place stop loss at breakeven. On the remainder of the trade I use a ( 2 bar high/low or the same atr as above, or just exit on a windfall... again discretionary but systematic when applied). THe only exception I have is if on the first day of the trade the trade gets real ugly.. i just bail the entire position and take the smaller loss. My best trades always show me a nice profit right away.
THis has worked well for me throughout the years.. it gives a rather smooth equity curve, and nice distribution of trades. The majority %40 of my trades are small/scratch winners.. and %35 loss and %25 nice winners. I consider a loss 1R, small/scratch trade as .5R and nice winner 2.5+R.
My goal is to have a %60+ win rate for high moral and psychological benefits. I cant imagine trading with losses over %50 of the time.. no matter what anyone here says.. it makes me feel like crap to keep on losing.. I am not a robot after all. Nothing like ringing the cash register as Marty Schwartz says.
--MIKE
Take loss at 1.5* atr(2). When in profit of 1R scale out %30-50 (exact amount discretionary but systematic when applied) then place stop loss at breakeven. On the remainder of the trade I use a ( 2 bar high/low or the same atr as above, or just exit on a windfall... again discretionary but systematic when applied). THe only exception I have is if on the first day of the trade the trade gets real ugly.. i just bail the entire position and take the smaller loss. My best trades always show me a nice profit right away.
THis has worked well for me throughout the years.. it gives a rather smooth equity curve, and nice distribution of trades. The majority %40 of my trades are small/scratch winners.. and %35 loss and %25 nice winners. I consider a loss 1R, small/scratch trade as .5R and nice winner 2.5+R.
My goal is to have a %60+ win rate for high moral and psychological benefits. I cant imagine trading with losses over %50 of the time.. no matter what anyone here says.. it makes me feel like crap to keep on losing.. I am not a robot after all. Nothing like ringing the cash register as Marty Schwartz says.
--MIKE
My method for getting out is a kind of combination of the two techniques that you mention.
I am primarily a chart based trader, meaning I don't use indicators like stochastics, MACD, moving averages, etc. I use the chart itself. Therefore my entry into the trade is based on some type of chart factor, which in all likelihood gives me some type of expectation as to a target.
If you were to read Edwards and McGee for example, you would see quite a number of measuring techniques based on the formation or pattern involved, swing targets etc etc.
So entering the trade I have an expectation in mind....but that doesn't mean that I adhere to this blindly either. I don't suspend the use of my brain.
I watch how the market acts after I enter the trade. Since I got into the trade for a technical reason, I also know how the market is supposed to act. If it doesn't act this way, warning bells start to go off. For instance, if the market just broke out of some type of bottom with a neckline, it might pull back to test the neckline. But it shouldn't start under the neckline, and certainly should start accelerating under the neckline. If it does, those types of positions should be closed.
If the trade is working as you expected, it now nears the target area. I wouldn't necessarily blindly sell. It would depend on how it's acting....is it starting to act tired? Is it accelerating? If so I watch it. I know how the market tops out for example...so if it gives some of those indications then I start looking for an exit.
To me the market is alot like shooting pool. You constantly play for position. Let's say you're in a position that has moved as you expected, and is now near your target area. If you sell, what's your next move? In other words, if you get out, and the move continues will you have a way to know that, do you have a way back in?
So here's the thing: alot of this is discretionary for me. I'm required to make decisions. I don't do anything blindly. But the market ALWAYS gives clues. When the market takes out the years low, and then not only does not accelerate, but turns strongly and starts up.....I don't know about you but if I'm short I cover. In fact, given the right situation I get long.
If the market is moving up....and a piece of negative news comes out...you expect the market to decline. What if it doesn't? Time to get on board! Or if nothing else, time to cover a short.
Now understand that I write most of this from the perspective of a guy who doesn't go for a 2 point gain, and I don't use a 2 point stop. My stops are mental, and are set based on what will violate my trade. Likewise, my objectives are typically larger. Some end up being day trades, but not all...some are multi day trades...like 2-3 days. Sometimes I get out at the end of a day just because I don't want to hold overnight. If so, the next day I just get back in, and continue on as if my position was uninterrupted.
My methods probably won't work for someone who is a in and out type scalper. My methods are more workable for someone who wants to make bigger gains, participate more in the move. Personally, I can't stand it when I sell out too soon and miss a big move. That has bugged me since the day I started trading.
So I like to RIDE the position for all it's worth, until something develops that convinces me I should take a profit. But to do this you have to be willing to sit, watch, wait. I'm willing.
Also, I don't like to set an automatic stop because I hate selling on weakness of this type. If the position moves against me, I'll liquidate into a reaction rather than chase after it. Just the way I am. Sometimes that will cost me something. But I can't tell you how many times setting a stop in a "normal" spot, like just above the high or low, gets hit and then reverses, and 5 minutes later it's running the other direction. You know, most of the time the ES spends alot of time sort of gravitating in a direction with lots of backing and filling. It doesn't make those dynamic moves every day....and when those come they are usually set up in advance if you know what to look for. So racing to liquidate a position of the market's terms is not absolutely necessary every day certainly.....just sometimes. And hopefully you know the difference.
OldTrader
I am primarily a chart based trader, meaning I don't use indicators like stochastics, MACD, moving averages, etc. I use the chart itself. Therefore my entry into the trade is based on some type of chart factor, which in all likelihood gives me some type of expectation as to a target.
If you were to read Edwards and McGee for example, you would see quite a number of measuring techniques based on the formation or pattern involved, swing targets etc etc.
So entering the trade I have an expectation in mind....but that doesn't mean that I adhere to this blindly either. I don't suspend the use of my brain.
I watch how the market acts after I enter the trade. Since I got into the trade for a technical reason, I also know how the market is supposed to act. If it doesn't act this way, warning bells start to go off. For instance, if the market just broke out of some type of bottom with a neckline, it might pull back to test the neckline. But it shouldn't start under the neckline, and certainly should start accelerating under the neckline. If it does, those types of positions should be closed.
If the trade is working as you expected, it now nears the target area. I wouldn't necessarily blindly sell. It would depend on how it's acting....is it starting to act tired? Is it accelerating? If so I watch it. I know how the market tops out for example...so if it gives some of those indications then I start looking for an exit.
To me the market is alot like shooting pool. You constantly play for position. Let's say you're in a position that has moved as you expected, and is now near your target area. If you sell, what's your next move? In other words, if you get out, and the move continues will you have a way to know that, do you have a way back in?
So here's the thing: alot of this is discretionary for me. I'm required to make decisions. I don't do anything blindly. But the market ALWAYS gives clues. When the market takes out the years low, and then not only does not accelerate, but turns strongly and starts up.....I don't know about you but if I'm short I cover. In fact, given the right situation I get long.
If the market is moving up....and a piece of negative news comes out...you expect the market to decline. What if it doesn't? Time to get on board! Or if nothing else, time to cover a short.
Now understand that I write most of this from the perspective of a guy who doesn't go for a 2 point gain, and I don't use a 2 point stop. My stops are mental, and are set based on what will violate my trade. Likewise, my objectives are typically larger. Some end up being day trades, but not all...some are multi day trades...like 2-3 days. Sometimes I get out at the end of a day just because I don't want to hold overnight. If so, the next day I just get back in, and continue on as if my position was uninterrupted.
My methods probably won't work for someone who is a in and out type scalper. My methods are more workable for someone who wants to make bigger gains, participate more in the move. Personally, I can't stand it when I sell out too soon and miss a big move. That has bugged me since the day I started trading.
So I like to RIDE the position for all it's worth, until something develops that convinces me I should take a profit. But to do this you have to be willing to sit, watch, wait. I'm willing.
Also, I don't like to set an automatic stop because I hate selling on weakness of this type. If the position moves against me, I'll liquidate into a reaction rather than chase after it. Just the way I am. Sometimes that will cost me something. But I can't tell you how many times setting a stop in a "normal" spot, like just above the high or low, gets hit and then reverses, and 5 minutes later it's running the other direction. You know, most of the time the ES spends alot of time sort of gravitating in a direction with lots of backing and filling. It doesn't make those dynamic moves every day....and when those come they are usually set up in advance if you know what to look for. So racing to liquidate a position of the market's terms is not absolutely necessary every day certainly.....just sometimes. And hopefully you know the difference.
OldTrader
Do any of you guys use point and figure charts?
Using a combination of 2 charts, the first on the ticks and a fairly small box size x 3 reversal, I get a volatile chart that shows lots of turnarouns in the market, pullbacks, continuations reversals and all sorts of things. It gives lots of entry and exit with pretty good timing too, but on it's own it is unplayable because it is too sensitive.
In combination with that, the second using a 1 min or 5 min chart with a slightly less sensitive box x 3 reversal shows up the underlying trend much better. By playing only in trend direction, everytime there is a pullback that is a profit opportunity, with a re-entry level at a lower level to wait for. This means that a 250 point move to the upside might be broken into 4 parts, but depending on how volatile the upwards trend is and the degree of sawtooth going on, the amount of profit that can ba taken out of the overall move is more than 250 often, (that is unless it is a straight up and downer as we've been seeing lately).
The 1 min chart still shows up major trend reversals resonably quickly, but just shows the pullbacks as another column and without the new buy signal, eventually just confirming a continuation pattern.
The last long position ends up with a losing trade, because the continuation pattern does not follow through, but the loser is very small and the profit taken is pretty good. you also know that there has been a change in the main underlying trend for the next however long it lasts...
I tried for 2 years to trade it using bar charts and moving avarages and all manner of other indicators, but could never get it to work as well as I wanted, but the second I switched to using P&F and really studied how they work and the signals my profits improved instantly and my number of losers decreased by much more than half.
Just my 2 cents to add to the pot.
Using a combination of 2 charts, the first on the ticks and a fairly small box size x 3 reversal, I get a volatile chart that shows lots of turnarouns in the market, pullbacks, continuations reversals and all sorts of things. It gives lots of entry and exit with pretty good timing too, but on it's own it is unplayable because it is too sensitive.
In combination with that, the second using a 1 min or 5 min chart with a slightly less sensitive box x 3 reversal shows up the underlying trend much better. By playing only in trend direction, everytime there is a pullback that is a profit opportunity, with a re-entry level at a lower level to wait for. This means that a 250 point move to the upside might be broken into 4 parts, but depending on how volatile the upwards trend is and the degree of sawtooth going on, the amount of profit that can ba taken out of the overall move is more than 250 often, (that is unless it is a straight up and downer as we've been seeing lately).
The 1 min chart still shows up major trend reversals resonably quickly, but just shows the pullbacks as another column and without the new buy signal, eventually just confirming a continuation pattern.
The last long position ends up with a losing trade, because the continuation pattern does not follow through, but the loser is very small and the profit taken is pretty good. you also know that there has been a change in the main underlying trend for the next however long it lasts...
I tried for 2 years to trade it using bar charts and moving avarages and all manner of other indicators, but could never get it to work as well as I wanted, but the second I switched to using P&F and really studied how they work and the signals my profits improved instantly and my number of losers decreased by much more than half.
Just my 2 cents to add to the pot.
Originally posted by Girlpower
Do any of you guys use point and figure charts?
Girlpower:
I used to use point and figure charts years ago, mainly on the daily charts. Don't use them now though....does your software provide this or do you do it by hand from the bar charts?
I think you've got a good technique....especially if you're buying setbacks against the main trend. I think half of this game is to learn that when you chase something you can lose alot more a whole lot quicker.
I suppose that your stops are below one of the recent lows (if you're long), in which case you're selling on weakness in terms of your stops. In that event, you definitely want to buying weakness as well. Buying strength, selling weakness intraday leaves a whole lot of money on the table.
OldTrader
Hi OldTrader,
My computer does P&F for me and I can easily play with the box/reversal sizes to get the best combination. I use a different feed and analytics from my trading platform ad don't use the analytics most brokers provide these days.
I'd love to be able to programme in my rules (which are very simple really - basic techniques for P&F) and just get the computer to optimise it, but there isn't a programme around that will do that :-( - Everyone seems to develope fancy toys with lots of bells and whistles and only very basic P&F specs.
I don't reverse things, I just get out of the first sign of trouble and get in again at the first sign of it going back along the trend. When the trend is up I only do Longs, when it is down I only do shorts... If I lose, my losses are minimal, and when I win my profits are much more. Also the win/lose ratio is pretty good, so profits tick up over time.
I look at it as a business. Establish what I need to do the job, provide the tools as cost effectively as possible, look to improving the tools only where a profit advantage can clearly be seen, and constantly seek to improve the skills.
Girlpower
My computer does P&F for me and I can easily play with the box/reversal sizes to get the best combination. I use a different feed and analytics from my trading platform ad don't use the analytics most brokers provide these days.
I'd love to be able to programme in my rules (which are very simple really - basic techniques for P&F) and just get the computer to optimise it, but there isn't a programme around that will do that :-( - Everyone seems to develope fancy toys with lots of bells and whistles and only very basic P&F specs.
I don't reverse things, I just get out of the first sign of trouble and get in again at the first sign of it going back along the trend. When the trend is up I only do Longs, when it is down I only do shorts... If I lose, my losses are minimal, and when I win my profits are much more. Also the win/lose ratio is pretty good, so profits tick up over time.
I look at it as a business. Establish what I need to do the job, provide the tools as cost effectively as possible, look to improving the tools only where a profit advantage can clearly be seen, and constantly seek to improve the skills.
Girlpower