Daytrading question I'm really stuck on related to profit-taking, and the perennial catch-22 of "letting runners run" without giving back too much of your profits when the runners come up lame. What I'm wondering is does anyone here employ a re-entry strategy to work around that problem?
What I'm envisioning is very simple. As soon as you enter, you determine the expected spot of strongest resistance. You exit as soon as that spot is hit. If you were right, and it reverses to where your initial stop woulda been, then you're a genius! You basically guarded all of it. If it looks like you're wrong, and it busts through resistance, then you re-enter, but only risk back to your original stop as though you'd never left the trade.
Result: on all the trades where you were right to exit, you're basically guarding 100% of possible profits. On all the ones where you were wrong to exit, you've at least re-entered to catch most of the remaining move. And on ones where you're fooled into re-entering but it reverses on you anyway, you still close out at a profit, perhaps slightly smaller, assuming your re-entry was at a slightly worse price than your exit point.
Curious if this kind of re-entry approach has a standard name? Do you think it's the worst of both worlds or the best of both worlds?
For context, I daytrade QQQ, and I'm worried that I'm just asking too much from the moves QQQ has in it. My entries are conservative to begin with, so I tend to enter fairly late into moves, and then my stop method is wide enough to "let runners run." It works like a charm when they do run, but I have too many trades where I'm up about 100 or even 150 cents, and my stop loss lets it run all the way back to break-even. These trades piss me off more than a loss.
What I'm envisioning is very simple. As soon as you enter, you determine the expected spot of strongest resistance. You exit as soon as that spot is hit. If you were right, and it reverses to where your initial stop woulda been, then you're a genius! You basically guarded all of it. If it looks like you're wrong, and it busts through resistance, then you re-enter, but only risk back to your original stop as though you'd never left the trade.
Result: on all the trades where you were right to exit, you're basically guarding 100% of possible profits. On all the ones where you were wrong to exit, you've at least re-entered to catch most of the remaining move. And on ones where you're fooled into re-entering but it reverses on you anyway, you still close out at a profit, perhaps slightly smaller, assuming your re-entry was at a slightly worse price than your exit point.
Curious if this kind of re-entry approach has a standard name? Do you think it's the worst of both worlds or the best of both worlds?
For context, I daytrade QQQ, and I'm worried that I'm just asking too much from the moves QQQ has in it. My entries are conservative to begin with, so I tend to enter fairly late into moves, and then my stop method is wide enough to "let runners run." It works like a charm when they do run, but I have too many trades where I'm up about 100 or even 150 cents, and my stop loss lets it run all the way back to break-even. These trades piss me off more than a loss.
