Exiting a trade

[Ashsaege]

When should one exit a trade?

I've learned the hard way of the importance of stop losses, position sizing, and risk management - and i strongly implement these now in my trading.

But I find it frustrating when I'm well in front on a trade, only to have it come back down to break-even or even a small loss and then it is exited by my stop loss.

What does everyone else do? Trailing stops? bank those small profits?

When you are well in front, what do you feel most comfortable in doing?

[beamstas]

There is more than one way to skin a cat

[Ashsaege]

There is more than one way to skin a cat

Im sure there is more than one way to milk a moose.

[Timmy]

Cat skinning / moose milking. Part 1.

Do you continue to evaluate the trade once it starts moving in your direction, looking for indications it may be changing behaviour etc.?
If the indications are, on the other hand, that it should continue to rise, is it doing a good job of continuation?
Someone posted recently, too, that if you start getting euphoric about the extent of the price rise then its time to exit.

Hope these ideas help.

[Ardyne]

Everybody will have their own method. Either indicators such as MACD or STO changes. Maybe join the swing highs and the swing lows with trend lines and wait for them to be broken. Read lots of websites and see what people do and work out what suits you. If in doubt I work out what the return is on my risk. If Ive risked say $100 on a trade and its up $300.00 and I'm not sure what to do next I get out because to me thats a good return on my money.

good luck

[Ashsaege]

Cat skinning / moose milking. Part 1.

Do you continue to evaluate the trade once it starts moving in your direction, looking for indications it may be changing behaviour etc.?
If the indications are, on the other hand, that it should continue to rise, is it doing a good job of continuation?
Someone posted recently, too, that if you start getting euphoric about the extent of the price rise then its time to exit.

Hope these ideas help.

I do continue to evaluate the trade once it is moving in my direction. I mainly use support and resistance levels, moving day average, and volume. I don't use complex technical analysis - keep it simple i reckon.

[Mr J]

When you are well in front, what do you feel most comfortable in doing?

Comfort is related to emotion, and emotions have nothing to do with my trading. I trade to maximise profit, and am flexible about how I manage trades. I do move stops up reasonably aggressively, but those has more to do with the fact that I make quick trades, and that positions can turn quickly.

[beamstas]

I tend to use the same method for every trade
This way it's simple and you don't have to make judgement calls.

You can also test your exit criterea through a series of random entries using Amibroker, to determine whether your risk management is giving you positive results or not.

For example, the exit criterea currently sitting in a mechanical system im coding returns 20%+ from 2003 to 2009 p.a, using random entries on random stocks at random times. To me, this proves that my risk management model will take care of any judgement calls that have to be made in the future, while managing my risk.

If you are returning a negative result with random entries and a positve result with your defined entries, it probably means that you have curve fitted an entry point that fits the backtested data, and probably won't stand up in unknown future market conditions.

Your risk management should always keep you better than break even. It should cut off losing trades fast but allow the winners to keep going.

If you'd like me to test some ideas that you have over historical data, drop me a private message or email and i'll see if we can arrange something.

Regards
Brad

[Wysiwyg]

But I find it frustrating when I'm well in front on a trade, only to have it come back down to break-even or even a small loss and then it is exited by my stop loss.

When you are well in front, what do you feel most comfortable in doing?

You could sell a percentage of your holdings "when you are well in front" and leave the rest at break even or above.

thanks to tech/a.

[AlterEgo]

You could sell a percentage of your holdings "when you are well in front" and leave the rest at break even or above.

thanks to tech/a.

Interestingly, I’m just reading “Trade your Way to Financial Freedom” by Van K. Tharp, and he advises against doing this.

Quote:
“There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits.”

“Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is.”

“What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. ...... You are also making sure that you only have a minimal-sized position when you make your largest gain. ...... It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits.”

“If it doesn’t make sense to you why you should avoid this sort of trading, work out the numbers. Imagine that you only take either a full loss or a full profit. Look at your past trades and determine how much of a difference this sort of trading would have made. In almost every instance when I’ve asked clients to do this, they become totally amazed at how much money they would have made holding on to a full position.”

[Ashsaege]

Interestingly, I’m just reading “Trade your Way to Financial Freedom” by Van K. Tharp, and he advises against doing this.

Quote:
“There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits.”

“Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is.”

“What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. ...... You are also making sure that you only have a minimal-sized position when you make your largest gain. ...... It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits.”

“If it doesn’t make sense to you why you should avoid this sort of trading, work out the numbers. Imagine that you only take either a full loss or a full profit. Look at your past trades and determine how much of a difference this sort of trading would have made. In almost every instance when I’ve asked clients to do this, they become totally amazed at how much money they would have made holding on to a full position.”

That's a great post.

When i first started, i would add to my position if the stock would drop, so i would accumulate while it was 'cheap'... I learned my lesson!! never again.

Now i only ever add to a position when a stock heads north.

[Wysiwyg]

Interestingly, I’m just reading “Trade your Way to Financial Freedom” by Van K. Tharp, and he advises against doing this.

Hi alterego, :) what page is that on please? thanks.

In reference to the Tharp quote ... he mentions "multiple" contracts and scaling out. This is not what I am referring to in the context of the thread. The initial risk % of capital still applies.

[Mr J]

AlterEgo, he's only addressing the negative side of scaling out and doesn't address the flipside. While scaling out could harm one's profit potential, scaling out can improve it if it leads to someone keeping some of the position open when they would otherwise close all of it.

Mathematically, scaling out can also make sense. The greater the move, the more likely that the market will retrace, the smaller the edge becomes, and therefore the position size should be decreased. Thoughts?

[AlterEgo]

Hi alterego, :) what page is that on please? thanks.

In reference to the Tharp quote ... he mentions "multiple" contracts and scaling out. This is not what I am referring to in the context of the thread. The initial risk % of capital still applies.

Page 265

Yes, his example of multiple contracts is slightly different to what you're referring to, however I still believe it applies. You are saying to exit a portion of your position at some arbitrary point, and leaving the remainder to run until your trailing stop is hit (or whatever your exit criteria is). Van Tharp is suggesting that you will be far better off letting your entire position run until your system indicates an exit. eg. If you sell half your position at say a 3R profit and let the remainder run, then when you get a really big winner, like say a 20R profit trade, you’ll only have half your position on it. What you’re suggesting is really the reverse of pyramiding.

[Wysiwyg]

Page 265


Thanks matey, I have much respect for Tharp.

[Mr J]

Van Tharp is suggesting that you will be far better off letting your entire position run until your system indicates an exit.

Shouldn't that be a given? We should be exiting a trade (or at least part of it) for a reason, not simply to lock in some profit for the sake of it. Perhaps his problem with scaling out isn't because scaling out is bad, but because it is probably poorly done, so he advises people to stay clear of it as a solution.

[AlterEgo]

AlterEgo, he's only addressing the negative side of scaling out and doesn't address the flipside. While scaling out could harm one's profit potential, scaling out can improve it if it leads to someone keeping some of the position open when they would otherwise close all of it.

On what basis would they close all of it? Based of the system indicatiing an exit, or exiting based on 'gut feel' that the price is too high?


Mathematically, scaling out can also make sense. The greater the move, the more likely that the market will retrace, the smaller the edge becomes, and therefore the position size should be decreased. Thoughts?

That may depend on what type of system you are using. If you're using a mean reversion type system, then there could be something in what you say, although I have no experience in that type of trading so can't really comment.

Successful trend-following type traders though, tend to do just the opposite - scale UP, rather than DOWN, so that they get the maximum out of their largest winners.

[AlterEgo]

Shouldn't that be a given? We should be exiting a trade (or at least part of it) for a reason, not simply to lock in some profit for the sake of it.

I agree.

[MRC & Co]

“Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is.”



Is Van Tharp actually a good trader?

I'm just not sure because the vast majority of good traders I've ever met have a 'gut feel' (it's basically just reading the tape or the underlying psychology) and do scale.

My opinion is many mechanical traders and their rules sometimes makes them miss the simple things.

[Timmy]

Is Van Tharp actually a good trader?

I'm just not sure because the vast majority of good traders I've ever met have a 'gut feel' (it's basically just reading the tape or the underlying psychology) and do scale.

My opinion is many mechanical traders and their rules sometimes makes them miss the simple things.

Here you go, MRC. You might want to put this on.

http://images.motorcyclecruiser.com/RF-1000-md.jpg

[MRC & Co]

Here you go, MRC. You might want to put this on.



ha ha, I am sure he can turn a profit in the markets (afterall it's really not that hard to do), but just how successful is he as a trader, as opposed to a 'guru'?

I like most of his ideas and think his very good to read. But anyone who spends all day watching tape, knows there are plenty of moments your conviction changes to all different degrees and as such, scaling in/out, or whatever can be extremelly useful I think.

Heck, even Soros scales, and not just because he has to for size.

[tech/a]

You could sell a percentage of your holdings "when you are well in front" and leave the rest at break even or above.

thanks to tech/a.

This is known as "Free trade"

I was introduced to this method by an old guy at an ATAA meeting.
(About the only person I found interesting). He hand plotted P&F charts.
Was a bit--no a lot eccentric.

"I treat stocks like a stable.If the stock is performing then it stays in the stable---if it isn't then I get rid of it.
Once a buy has added 100% to its buy price I sell 50% of it and leave the rest to trade indefinitely. I have some which I have done this with 3 times.
The only way I can then lose is if it is delisted and even then its only my profit on that share. I have 30 stocks in my stable at most times and been doing this for 20 yrs."

Ive never done it but made a lot of sense.

Now to the question.
The answers show to me that there isn't to much trading planning let alone a proven trading system.
The answer is in there.
Are you trading a long term method? What are its exit rules?
Are you trading a short term method? What are its rules?

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

[nunthewiser]

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

I do as pointed out amongst these threads a while back . a "free" carry hold is my bread and butter and sometimes bonza burger.

i have removed original capital and preserved that capital plus also i have built myself a foundation of holding the stock as a longer term hold without caring about minor /abrupt swings and moves

i also use this free hold as a grounding on other trades of same stock with the addeed bonus of holding at a mighty nice avereage and also keeping stock as profits instead of cash and building position BUT still keeping the original capital flowing

now i may not know all the lingo or have all the indicators or pay 20k a year on "learning " but i sure know what works for me

each to there own and if it obviously dont work for you , dont do it

[Qed]

hey NTW hows trix

[nunthewiser]

hey NTW hows trix


if that the same QED from commsec in the past.......... gday . and good . we in livechat asx hours m8. pop in

[Qed]

quod eros demonstrandum ,, its moi will do ,, too much waffle there

[tech/a]

I do as pointed out amongst these threads a while back . a "free" carry hold is my bread and butter and sometimes bonza burger.

i have removed original capital and preserved that capital plus also i have built myself a foundation of holding the stock as a longer term hold without caring about minor /abrupt swings and moves

i also use this free hold as a grounding on other trades of same stock with the addeed bonus of holding at a mighty nice avereage and also keeping stock as profits instead of cash and building position BUT still keeping the original capital flowing

now i may not know all the lingo or have all the indicators or pay 20k a year on "learning " but i sure know what works for me

each to there own and if it obviously dont work for you , dont do it



You wouldnt happen to have a trading statement for that statement would you?
The usual $500 I expect you'll have that nun.
Joe would be very appreciative.

[nunthewiser]

You wouldnt happen to have a trading statement for that statement would you?
The usual $500 I expect you'll have that nun.
Joe would be very appreciative.


of partial sells and rest riding showing sizes of my trades ? no bugger off my trade sizes and capital none your business actually

couldnt give a hoot if my claims or strategys respected or read actually

i have posted trade entrys/statements etc here in forums already and i will not be part of your egotistical dick holding contest .

if you want a statements showing simil;ar kind of thing as posted in forums already .yeah no worries bud but yes it will cost YOU the 500 just for the inconvenience

( examples of trade statements /orders filled/sold should be in LKO , FMS and maybe BTA etc threads)

no offense intended

my strategy as pointed out in my last post is still valid and if you cannot see that then perhaps you need a course or buy a book where perhaps its written nicer

[matty2.0]

You have a specific target BEFORE you enter the trade.
You make money BEFORE you enter the trade.

[makingmoney]

Interestingly, I’m just reading “Trade your Way to Financial Freedom” by Van K. Tharp, and he advises against doing this.

Quote:
“There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits.”

“Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is.”

“What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. ...... You are also making sure that you only have a minimal-sized position when you make your largest gain. ...... It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits.”

“If it doesn’t make sense to you why you should avoid this sort of trading, work out the numbers. Imagine that you only take either a full loss or a full profit. Look at your past trades and determine how much of a difference this sort of trading would have made. In almost every instance when I’ve asked clients to do this, they become totally amazed at how much money they would have made holding on to a full position.”

Best thread on asf in which i have read so far:)

[Mr J]

On what basis would they close all of it? Based of the system indicatiing an exit, or exiting based on 'gut feel' that the price is too high?

A cliche answer, but I suppose at whatever point the position is no longer considered profitable.


That may depend on what type of system you are using. If you're using a mean reversion type system, then there could be something in what you say, although I have no experience in that type of trading so can't really comment.

Successful trend-following type traders though, tend to do just the opposite - scale UP, rather than DOWN, so that they get the maximum out of their largest winners.

It might, but I think it's relevant to any system. It's just a strategy used when the probabilities that are in our favour are decreasing.

I assume you mean pyramiding, but that has nothing to do with scaling out. You can do both if you wish. I doubt they maximise winners, as I'm sure they will decrease their positions at points of lower probability.


This is known as "Free trade"

Ive never done it but made a lot of sense.

Depends whether there is reasoning other than to lock in breakeven/profit while trying to also hit a homerun just for the sake of it.


Now to the question.
The answers show to me that there isn't to much trading planning let alone a proven trading system.
The answer is in there.
Are you trading a long term method? What are its exit rules?
Are you trading a short term method? What are its rules?

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

Don't make assumptions tech. I have clear rules, though some people will no doubt consider them cliche. I exit a trade completely when I am no longer confident, and exit partially if confidence is lowered but still think it is +ev.


You have a specific target BEFORE you enter the trade.
You make money BEFORE you enter the trade.

I find this very unreasonable, as I don't presume to know what the market will offer. If anything, all I can do is guess, and be flexible.

[MRC & Co]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.

Discretion at it's finest. Lost 5% of his account in one trade, didn't blow up, far from it. No traditional position sizing and systematic process there. Just a good read of the markets and a good read of underlying psychology of the markets (see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.

[nunthewiser]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.

Discretion at it's finest. Lost 5% of his account in one trade, didn't blow up, far from it. No traditional position sizing and systematic process there. Just a good read of the markets and a good read of underlying psychology of the markets (see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.


black and white = grey :D i got taught that at kindy.no cliche's about it

seen many a clich'e bandied around of late and buggared for the life of me if its actually practical to use half of them in real life trading . write it in a book .hell yeah ...sounds great . use it in the market at your own peril .

as far as spoofing the depths :) hell yeah tis a daily occurrence . lol knew a bloke once actually that does this on a regular basis on a certain stock he regurly pushes around to suit his needs but this is merely heresay and i was drunk and he was drunk chatting about it at some pub i cannot remember now . moral of the story is that the market is a living breathing creature and no amount of theorising about it will make one iota in the actual outcome ... all one can do is attempt to be on the right side of it .

money management and controlling ones gains and losses is a different matter tho and one mans risk may be another mans beer money but still boils down to the same thing ..... one must make more than they lose at the end of the day......

anyways what would i know im just a nun that obviously likes talkin crap about something i never learnt in a book :D oh and obviously never uses the previous strategys because i refuse to show off my trade sizes / capital bases to some nob off the internet.

each to there own i say and if it works do it ......... if it dont ........move on and find something that does.

[Naked shorts]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.



The doco has been taken down from Youtube, but now there is a torrent floating around...
http://www.elitetrader.com/vb/showthread.php?s=&postid=2519450#post2519450

[MRC & Co]

Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.

When really, this is a HUGE element of most traders strategy.

My biggest gripe, is people (tech or Van Tharp, bet he likes being included in that bracket) dismissing a certain strategy or idea without enough knowledge of how these guys do their thing.

[nunthewiser]

P.S

i should point out that in NO way am i viewing those that have paid or paying for courses /books/ learning with any scorn WHATSOEVER .. if it works for you .BRILLIANT STUFF

i do however view those that think that THERE way is the only way to do things in the market,i do hold those ideals with contempt and scorn

there is none so blind that cannot see

end of sermon

amen

[Cartman]

(see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.


anyone who laughs only shows their ignorance Mirc ----

every punter lives within his own comfort zone ---- i have no problem with that cause i do it myself --- but ---

if punters preach "superiority" without foundation or without humility --- that kinda peeves me as well ---not exactly what u r talking about but similar methinks. ;)

[Chorlton]

For example, the exit criterea currently sitting in a mechanical system im coding returns 20%+ from 2003 to 2009 p.a, using random entries on random stocks at random times.

Hey Brad,

What code do you use to generate the random Buy Signals? Is it similar to that contained in Howard Bandy's book or something else?

[nunthewiser]

Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.

When really, this is a HUGE element of most traders strategy.

.


yep.


my calls here may be viewed as reckless , unknowledgeable , untimely at times ......but hey thats what i got in front of me at the time . its what I see . right or wrong... still MY view ....... i trade them views right or wrong BUT i also have my OWN plan on them ...... and that is ALWAYS right regardless of a loss or a win . ( give or take the odd trading halt and news scenario with major gapping)

im more than happy to enter trades i view as a potential turning point and stop out when proven i was wrong , i dont subscribe to the theory of " dont predict a trend , go with one" .

dont we all predict the trend gunna continue after our entry ?

dont we all predict entry and exit prices ?

so why cant ppl predict there perceived turning points and stop out if wrong ?

rant now continues...............


how about this 2% rule that gets bashed around here so often ...............

then on the next page we hearing that you must be diversified in your holdings !

what happens if they have a small capital base ? are they still expected to stick to "the stocktrading rulebook " and buy a parcel they need a MAJOR move just to cover brokerage ?


what happens if one has a larger capital base and is invested in a nice yield paying investment and does not trade the market moves ? happy to sit there on 0 , miniscule or sometimes even negative growth but the stock is still returning the same yield year after year ...... are they wrong also because they care not about the highs and lows?.......

so many varying opinions and strategys and situations ......... use the force and find the one that fits .

this post is no way intended to disrespect any of the many book writers , course offerers , trading teachers in these threads as you found your own niche and now making a buck teaching others BUT what you teach does not provide the golden goose to the person whose style and attitude/psycology differs greatly to yourselfs

the market is not a robotic enviroment it will do as it wills guidelines and theory only goes so far.

[Aussiest]

still MY view

.......


how about this 2% rule that gets bashed around here so often ...............


In relation to first point, that is true. Because then you can take responsibility for your losses and gains, and that's what it's all about sometimes.

In relation to second point, i don't agree with the 2% rule. I think 0.5-1% is far more sensible. What happens if you keep getting stopped out of a trade and you enter again and again? By the time it actually works for you, you're probably down 2% pr even more, therefore you have to make up the 2% regardless of what happens. What if the position never appreciates 2% and you make an overall loss? Perhaps tighter stops are the answer???

[beamstas]

Hey Brad,

What code do you use to generate the random Buy Signals? Is it similar to that contained in Howard Bandy's book or something else?

I use an adaptation of his formula, with my trade management overlaid over that. ;)

[Mr J]

What happens if you keep getting stopped out of a trade and you enter again and again?

You'd want rules to prevent that. Ideally, the strategy would take care of it. My strategy for example, if I get stopped out I'm probably wrong anyway.


In relation to second point, i don't agree with the 2% rule. I think 0.5-1% is far more sensible.

If we're trading for a profit, 2% is fine in terms of risk, providing margin and large intraday drops aren't a factor (e.g. very shorterm trading at 2% could lead to a world of hurt if the market drops and the broker goes down).


dont we all predict entry and exit prices ?

I don't, at least in regard to the exit. I may have a rough idea, but I'm a believer of taking what the market offers. As for predicting turning points, I'd call myself a reactionary trader than a predictionary trader. I like to see the market react, as I feel that is what makes the trade a higher probability trade. Before the market reacts, I'll see everything as just potential.

[Timmy]

The doco has been taken down from Youtube, but now there is a torrent floating around...
http://www.elitetrader.com/vb/showthread.php?s=&postid=2519450#post2519450

I found that torrent too, works fine. Very entertaining and instructive doco.


Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.
...

dismissing a certain strategy or idea without enough knowledge of how these guys do their thing.

Amen.


P.S

i should point out that in NO way am i viewing those that have paid or paying for courses /books/ learning with any scorn WHATSOEVER .. if it works for you .BRILLIANT STUFF

i do however view those that think that THERE way is the only way to do things in the market,i do hold those ideals with contempt and scorn

there is none so blind that cannot see

end of sermon

amen

Amen.

[tech/a]

I use an adaptation of his formula, with my trade management overlaid over that. ;)

Tradesim has it in built.


Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.

When really, this is a HUGE element of most traders strategy.

My biggest gripe, is people (tech or Van Tharp, bet he likes being included in that bracket) dismissing a certain strategy or idea without enough knowledge of how these guys do their thing.

I'm sure Van.K.Tharp is delighted.
Never dismissed just have no need for that style of trading.
Admittedly todays a little tougher.


http://i25.photobucket.com/albums/c68/sceptik/Profit1.gif

Just for you Nun.



In relation to first point, that is true. Because then you can take responsibility for your losses and gains, and that's what it's all about sometimes.

In relation to second point, i don't agree with the 2% rule. I think 0.5-1% is far more sensible. What happens if you keep getting stopped out of a trade and you enter again and again? By the time it actually works for you, you're probably down 2% pr even more, therefore you have to make up the 2% regardless of what happens. What if the position never appreciates 2% and you make an overall loss? Perhaps tighter stops are the answer???

This is a reasonable stratagy if you know how to read price and Volume.
The 2% is risk on capital base.
Not 2% of share price.
You need to learn position sizing.

There are times to have much smaller % at risk (Like now).
Personally .25 to 5% is common -- of course this varies from trade to trade as well as intra trade on a position I'll keep adding to.
Some positions will trigger a stop on one or more of the Pyramid trades while other base trades remain open.

There are many ways to be creative with Risk management.

[nunthewiser]

http://i25.photobucket.com/albums/c68/sceptik/Profit1.gif

Just for you Nun.




.[/B]


um thats lovely tech......... the point being ?

i have a few statements like that dotted around these threads with entry prices /exit prices on them also ...........

what you asked me was for proof of my strategy and to do that i must post traded parcel sizes in statements so you can see how many i bought and how many i kept at what prices to validate my "free carries"

frankly darl that aint gunna happen as pointed out previously MY trade sizes /capital base is no ones concern other than my own and those close to me .....

now i know your Ego may not accept the fact that my strategy works for me and may work for others and it must be wrong because i will not show you my financials . but i spose that is a cross i will have to bear

all the best

[tech/a]

I have no problem with vivid imaginations.
Carry on.

[nunthewiser]

lol unreal

[Aussiest]

This is a reasonable stratagy if you know how to read price and Volume.
The 2% is risk on capital base.
Not 2% of share price.
You need to learn position sizing.

There are times to have much smaller % at risk (Like now).
Personally .25 to 5% is common -- of course this varies from trade to trade as well as intra trade on a position I'll keep adding to.
Some positions will trigger a stop on one or more of the Pyramid trades while other base trades remain open.

There are many ways to be creative with Risk management.

I understand the whole position sizing thing. Eg, if i had 100k trading capital and i wanted to short CBA at 41.90 with a stop at 42.25 (very tight) > 2% of my avail capital = $2,000, therefore i could "sell" 5714 cba shares (maybe about 5700 inc. brokerage). What i don't get is the entry and exit criteria sometimes (support and resistance, yes, but sometimes there is other stuff in there, such as reports, sector related performance etc). That's what we (i) need to learn.

Sorry to OP, a little off topic.

[tech/a]

Aussi.

You dont "Need" that info.
Even long term.
Sure you can use it but I dont know zip about any company I'm trading.
All I'm interested in are the numbers.(My trading Numbers).

My tool of trade is shown here and its pretty easy to see the "Obvious" buy and sells. I trade the not so obvious.
Like white diamond single and double print switches.

These are 10 min AIO Charts.
Software is Tradeguider.
Click to expand.

[Trembling Hand]

What i don't get is the entry and exit criteria sometimes (support and resistance, yes, but sometimes there is other stuff in there, such as reports, sector related performance etc). That's what we (i) need to learn.


Aussiest you may be over thinking it a tad. I remember a post from you about 3 weeks ago saying its not a good idea to to go long into earning season. I was going to point out then that if you have a signal its a signal.

Maybe a bit of post traumatic stock selection going on??

[Aussiest]

Maybe a bit of post traumatic stock selection going on??

Yeah, you're right. I am a bear with a sore head.

Decided to take far more time in identifying set-ups rather than trying to predict where the market is going.

Thanks for the charts tech/a. Will have a better look over them tonight. At a glance, it seems that signals are generated with support or resistance holds. Logical: buy / sell just outside of resistance / support. Stop loss on other side of support / res levels.

You're right though. Just got to concentrate price rather than action. It will either go up, down, or sideways. Just make sure MM is in place.

[Frank D]

Eg, if i had 100k trading capital and i wanted to short CBA at 41.90 with a stop at 42.25 (very tight) > 2% of my avail capital
What i don't get is the entry and exit criteria sometimes (support
and resistance, yes, but sometimes there is other stuff in there, such
as reports, sector related performance etc). That's what we (i) need to learn.


Commonwealth Bank Monthly

What you need to learn about is price action, and you don't go shorting
Monthly breakouts in July.

I know you are saying 'shorting' CBA as an example, but because you are saying it probably means you are also thinking of doing it.

Initially my target was $46.55, but now it's 43.32 as dynamics have changed.

43.32 may be the 'top' or it might not, but if you are going to think
about shorting you need to get your 'timing' better and work out
filtering techniques in larger timeframes

I say may not be the top, because I have a target on the Fin index @ 4400
and currently it's only 3934.

I put out a chart a couple of weeks ago on the Financial Index....

http://www.aussiestockforums.com/forums/showthread.php?t=4888&page=333 post #6651

[Aussiest]

Commonwealth Bank Monthly

What you need to learn about is price action, and you don't go shorting
Monthly breakouts in July.

I know you are saying 'shorting' CBA as an example, but because you are saying it probably means you are also thinking of doing it.


Thanks Frank D. I don't think i'd be thinking about shorting it until around $44.50. Earlier today, i dropped that level to 41-42 because of resistance at 42, but i think it will push through that given the ferocity of it's rise today. So, yeah, i really only used it as an example at this stage.

Interesting chart by the way. Although, i don't really understand the 50% support concept.

[Mr J]

Okay, how about orders for exiting? It seems to me that choosing when to exit is more valuable that where to exit. By that I mean hitting the bid/ask and getting it while you can versus standing in line and hoping someone takes your offer. When I exit, it's because I believe the market will turn on me, so getting out at that point seems to be more valuable than trying to get than extra tick on exit. That tick can make all the difference though, which is why I wouldn't mind some advice.

[tech/a]

Okay, how about orders for exiting? It seems to me that choosing when to exit is more valuable that where to exit. By that I mean hitting the bid/ask and getting it while you can versus standing in line and hoping someone takes your offer. When I exit, it's because I believe the market will turn on me, so getting out at that point seems to be more valuable than trying to get than extra tick on exit. That tick can make all the difference though, which is why I wouldn't mind some advice.

In this case J I want to exit when the stock is floundering--not rising so I'll never get the top.--close!
I use a stop limit order as I don't want to be taken out by a heap of sellers at a level which may be common to mine.
Slippage can be a huge concern to me and I took Radges advice after getting hit often when my sell combined with others took out many levels.
Often I had the worst fill,only to see it bounce back instantly to the level I wished to sell at.

No problems now.

My stop will be raised quickly in your above example and I use an hourly chart to do this. The stop will be a tick below an obvious support level on the Hrly chart. Occasionally it will pull away from that level in my favour and that will then become my new trailing stop level for all positions on that trade.

$1.48 is my level for AIO in exactly the situation described above.

[edbar]

I use a robotic trading system that allows me to enter a profit goal, and a pullback (trailing stop loss) that kicks in only after reaching my profit goal (so I can ride the profits higher until the stock starts to pullback, then it takes the profit).

There is also a profit protection feature that guarantees me something in case the stock reaches 1/2 of my goal and then starts to pull back. That feature actually locks in more profit as the price goes higher and higher, by shrinking the trailing stop loss the higher the stock goes.

Profit goal: 5%
Pullback after reaching profit goal: .5%
Start Profit Protecting: 2.5%

Also once I have reached my profit goal, it automatically closes my position 15 minutes before the market ends, even if the pullback does not occur.

Cheers,

Ed