Optimal exit point once a position has turned against you?

C

colina

Hi everyone. I was curious if I could draw upon other peoples’ experiences, learning how to wash out on a trade.

Let me preference this by saying I am not a professional trader but am starting to dip my feet in the water so to speak, learning this takes a lot of discipline and respect.

I have been fooling myself paper trading just focusing on technicals’. There is another learning curve to graduate from(emotional detachment).

What I have noticed about myself while in a position,Greed kicks in while refusing to let go of a winning trade and Fear kicks in while refusing to wash at a loss.

Another bad habit of mine is hesitating. Only to watch the trend take off. Panic sets in and I enter late, only to chase the trend after it has peaked. Really Ugly, but true for me
(we are talking fast time scales here).


I have not seen many postings on learning how to wash. I am starting to learn if I enter a position (based on whatever set of technicals’) and its’ a bad entry, sometimes it pays not to exit immediately. There is an ebb and flow, a give and take.

Sometimes it pays to ride out the retrace only to have the resistance/support level of the previous channels’ peak or trough retested.

Sometimes the entry is not optimal but if I stand back and look what is happening on a slower time frame, the trade does eventually come to fruition or at least wash.

Does anyone here have any thoughts on how to look for an optimal exit point once a position has gone against you ?


(will post some pics for this morning 05/23/03 for ES03M, as an example)
 
(please note, these pics do not seem to display well on the web, but if you download to your pc they show up, i.e. right click on pic and choose menu option 'save target as'........)
 
The pics show up fine once you maximize the picture. For this style of trading most people will tell you to set a stop loss % and a trailing stop % for winners to remove any emotional factor.
 
Quote from colina:

Another bad habit of mine is hesitating. Only to watch the trend take off. Panic sets in and I enter late, only to chase the trend after it has peaked. Really Ugly, but true for me
(we are talking fast time scales here).

Does anyone here have any thoughts on how to look for an optimal exit point once a position has gone against you ?
More...

I think the hesitation might be due to wanting to know with some maximum probability that the trade will be a winner. Eacxh trade has risk and you'll never have 100% confirmation that you have a winner. So you need to enter a trade when your criteria are met, techincal or otherwise.

On the exit of a losing trade I tend to set a max loss in dollars I'm willing to take.
 
Get out as soon as when why you got in is no longer true. Don't wait to be wrong. Price is irrelevant. Time is the relevant criteria. When you got into the trade, you should have had a specific time frame you thought the event would occur. If that time frame passes OR if it becomes obvious that you misjudged the situation, then liquidate immediately.
 
Quote from colina:

Hi everyone. I was curious if I could draw upon other peoples’ experiences, learning how to wash out on a trade.

Let me preference this by saying I am not a professional trader but am starting to dip my feet in the water so to speak, learning this takes a lot of discipline and respect.

I have been fooling myself paper trading just focusing on technicals’. There is another learning curve to graduate from(emotional detachment).

What I have noticed about myself while in a position,Greed kicks in while refusing to let go of a winning trade and Fear kicks in while refusing to wash at a loss.

Another bad habit of mine is hesitating. Only to watch the trend take off. Panic sets in and I enter late, only to chase the trend after it has peaked. Really Ugly, but true for me
(we are talking fast time scales here).


I have not seen many postings on learning how to wash. I am starting to learn if I enter a position (based on whatever set of technicals’) and its’ a bad entry, sometimes it pays not to exit immediately. There is an ebb and flow, a give and take.

Sometimes it pays to ride out the retrace only to have the resistance/support level of the previous channels’ peak or trough retested.

Sometimes the entry is not optimal but if I stand back and look what is happening on a slower time frame, the trade does eventually come to fruition or at least wash.

Does anyone here have any thoughts on how to look for an optimal exit point once a position has gone against you ?


(will post some pics for this morning 05/23/03 for ES03M, as an example)
More...

"Crucial Elements to Trading Succes"...
1. When a trade goes against you AND breaks a nearby S/R by a small buffer, stop out.
2. See #1.
3. See #1.
4. Identify and take high probability trades.
 
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