How do you determine exits?

D

Daxtrader

My entries are getting better but I just don't know when to exit. Sometimes i leave way too much money on the table. I'll scalp for 30 cents and see the stock fall another $1 an hour later. I try to use S/R levels but sometimes it's just not clear.

If I try to hold on the stock will flip on me and i'll just give it all back. Sometimes I feel like this donkey:


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Quote from Daxtrader:

My entries are getting better but I just don't know when to exit. Sometimes i leave way too much money on the table. I'll scalp for 30 cents and see the stock fall another $1 an hour later. I try to use S/R levels but sometimes it's just not clear.
More...

Good question. The lack of responses tells me either people think it's a dumb question or don't have a good answer. I'm a rookie trader, so consider the source, but I think there are two main ways to make this decision:
* the same reason you decided to enter the position should also tell you when to exit
* you hit either your profit goal or maximum acceptable loss.

Because there is no Holy Grail, neither method works perfectly, but my testing tells me the first method produces better results. Odds are you will always end up with suboptimal results on individual trades. The goal is not to squeeze every last penny out of a trade as much as maximize the risk-to-reward ratio over many trades. HTH.
 
Quote from bluedemon77:

...The lack of responses tells me either people think it's a dumb question or don't have a good answer...
More...

It's not a dumb question but there's dozens and dozens of past threads on this topic that has been answered in depth.

http://www.elitetrader.com/vb/search.php?s=

Simply, many traders probably assume the thread starter will eventually use the search function to review the old discussions.

Mark
 
Quote from bluedemon77:

Good question. The lack of responses tells me either people think it's a dumb question or don't have a good answer.
More...

Because it is the most difficult to answer. Exits determine profitability. You can make any kind of entries, it is the exit that will decide if you made money, made enough money or lost only a little...

Also the question is too general. It really depends on your strategy and expectations, etc...
 
Exits are my personal crutch in trading. You are never right, which sucks. :mad: What I mean is, as the OP said, you either get out too early or too late, never at the perfect spot.

So, my first suggestion is to understand the dynamics of the market and what it does to your psyche. You'll never time exits perfectly consistently. As soon as you come to grips with that, it's a matter of building an exit strategy that works for you. In the beginning, odds are that you will either go for smaller moves or try to ride the wave. Trying to do both effectively and consistently, esp in the beginning of one's trading biz, is a losing proposition. See what you are comfortable with and build around that.

I realize that sounds easy, but practicing restraint in real-time is not quite so easy in my opinion. You have to understand that either 1) you will ride the wave or 2) you will catch small ripples of the big wave.
 
The answer for this lies neither in entry, nor in exit.

:)

It lies between them, during the trade, it's what is called trade management, and it could be represented by something as simple as the trailing stop to breakeven or you can go as far as scaling in, out, arithmetically, geometrically, and all that.

If you manage your trade according to your goal and strategy, exits are a breeze. You just need to set a target before entering the trade.

The problem is that most beginners look at "leaving money on the table" and "missing out" in a very different way than they should. If you set a target, you have a good risk/reward, you manage your trade so you don't end up with a loser out of a winner, then why are you complaining about leaving money on the table ... ?
 
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