Poster: sharks37 Date: 17/06/16 Time: 18:45:22 Post #: 18060583 Exiting trades, a topic that's often at the forefront of my mind (sometimes in front of spending quality time with my wife or where am I going to ride my bike this weekend).
I am TA based trader. I have made some big losses in my time but all of them - 100% of them - were the result of me convincing myself about the fundamentals of a company (and getting it wrong) but ignoring my TA which in each case would have had me out of the position with a good profit or a manageable loss. The lesson learned - I am not as good or disciplined about FA as I am on TA. I find too many shades of grey in FA based decision making on exits, whereas with TA the rules can be very black and white - the price either closes below a certain level or trendline or it doesn't.
Targets or stoplosses are the 2 ways to exit. No matter whatever FA factor that contributes to my trade justification/entry, I always set my trade size, target and stoploss exits based on TA: (a) identifiable chart based levels and (b) the risk/reward ratio between those levels.
Imo the probability of price reaching a given target from the entry price reduces the further the target is from the entry level. In other words if the chart says there are 2 resistance levels which are natural choices for exits, the higher one will have a lower probability or longer timeframe to achieve (if it ever does). Therefore I automatically enter a trade with the view to take some profit at different levels (usually just 2 - so half at a 1st target level and the other half at a 2nd target level) - the 1st level being more probable of success than the 2nd. So to compensate for my effort and the lower probability of the 2nd target being achieved, if the price reaches the 1st target I cash out the designated proportion of my position (usually half) and set the stoploss on the remaining portion of my position at my entry price, that way I have the best chance of making some profit from each trade.
Of course as FH said, if any new information relating to the company comes to hand after entry causes me to change my view about my trade, i.e. FA reasons, I will review my trade justification, but my TA rules are my backstop because I know they are black and white and I am better (psychologically) at adhering to them.
Maybe the above is not the best way, but I've found from experience its best for me. Poster: 20521 Date: 17/06/16 Time: 18:50:13 Post #: 18060612 stop losses are a necessary evil but sometimes you have to leave , if the market says your wrong ....listen, dont watch ....take action.
"the trend is your friend until it end where it bends"....ed seykota
Poster: minoil Date: 17/06/16 Time: 20:23:50 Post #: 18061150 Exit strategies etc............ here's where I put the dunce cap on !! well trained in not knowing when to sell, and selling too early, so, I'm hoping to learn something from here........... Fortunately, though I sell winners too early, I am learning to sell the losers early, giving me the benefit of smaller losses, and smaller, though more frequent profits. To allow better exits for me means having more faith in my judgment, a better understanding of market momentum and sentiment, and, larger holdings, allowing me to sell down gradually........... I have however, noticed that since T+2, there seems to be a shorter horizon on runs generated by announcements etc.............. One thing i have continually picked up from posts on HC............some folk simply "forget" to sell.....is it greed, or the belief that something is going to the moon?, but I frequently see folk who haven't sold, and let all those gains leak away i never forget to sell, and, I may bail early, but I never regret it, whether it's a win or loss.........do the trade, and its over Poster: MOSSuMS Date: 17/06/16 Time: 20:16:51 Post #: 18061121 Hello momentum, my old friend, He's come to haunt us all again, Because a rising vision softly parting, Left its seeds while we were charting, And the golden vision that was planted in our brains Still remains Within the trading halts of silence.
In restless dreams I trade alone Narrow bands of bollinger stone, 'Neath the halo of a hotcopper ramp, I turned my eyes to the selling camp When my buys were stabbed by the flash of a falling trend No bend at the end And touched the dead bounce of silence.
And in the selling depth I saw Ten thousand people, maybe more. People trading without speaking, People panicking without listening, People writing trades that brokers never share And no one dared Catch the falling knife of silence.
"Fools," said I, "You do not know. Selling like a cancer grows. Hear my words that I might teach you. Quote my posts that I might reach you." But my words like listed legals fell And echoed in closing bells of silence
And the punters bought and prayed To the golden god they trade And the chart flashed out its warning In the pattern that was forming. And the chart said, "The return to profit is underwritten on Bridge St walls And Exchange falls And wishing news not sounds of silence." Poster: Zand34 Date: 17/06/16 Time: 20:43:17 Post #: 18061246 Stops don't do them period! Targets- most of my targets are based on TA- entry support levels and exits resistance levels , in some cases its breakout targets using ascending triangles and working out SP targets in relation to base of triangle, every entry is different but every entry has a plan - depending on SP history or future catalyst targets may be 25%, 50%, 100%.. eg entered RYG/XPE very late at 4.8c last year plan was 100%, was at a loss and could of sold many times for a loss throughout the year but patience and belief in FA and TA, carried me all the way to 9.6c sold out completely and now stalking a re-entry back somewhere in the 6's, it may get away from me but so be it, if my plan plays out I'm in again for the next ride! As for exists I'm big on RSI, spreads & volume! If RSI is lurking at or above 80 and I'm in profit, I may collect and re enter at a lower level, again if I'm on a stock and in profit and suddenly we have a few widespread down bars on major volume I'm out! But it also comes down to what kind of trader you are? Day trading entries and exits IMO purely based on intraday chart signals, STT trades based on FA/TA, Long term based on FA! Let runners run but don't forget to take profits along the way! Poster: TraderGT Date: 17/06/16 Time: 21:33:07 Post #: 18061530 What exit strategies people use?
For STT it's mainly FA based, I.E. MC relative to peers and if I no longer see value i'll sell this could be above or below my entry price! Some use of TA but mainly FA based for me. - Do you set targets and if so how do you set your targets? Do you always sell when target is reached? I do always set targets, I will have a target in my mind before a buy - YOUR ALWAYS SHOULD HAVE A PLAN My first target will trigger me to sell some or free carry, remember the trend is your friend - If using TA to exit, what signals/candles/patterns/indicators do you look for? For STT I mainly use FA - Sell or hold on news? Depends what the SP has done prior but selling some on positive news is generally a good option - Are there certain times of the day which are better suited to selling? Yes! - For investments I generally like to enter later in the day as many retailers but early and some may lose patience later in the day, Friday afternoon is always great for the buyer! - Do you use trailing stops for timing when to sell? For STT generally I have quite wide stops or sometimes a "mental" stop - Any other tips for exiting." Just remember the trend is your friend and let your gains run and cut losses sharply.
When the trend changes you need to act quickly Poster: FullMoonFever Date: 17/06/16 Time: 23:14:51 Post #: 18062024 Me... in early days for both E's was all about the FA, the research, the mental target, the Ann's, the entry and like @minoilsays, generally leaving profit on the table on exit if got spooked or hit what I thought was a good target but on the occasion(s) didn't leave anything on the table....ended up indebted to the table
And then...............there was the hype, the glaring lack of knowledge and understanding how quickly the mkt can turn snaps u back to reality at times. Took some slaps to the head back then, made some nice little gains at times too but thinking back, not sure if was luck, some genuine sound researching and actually understanding some stocks FA well or a combination of those. But... all part of the learning curve and wouldn't give it back.
After actually joining HC and mentally measuring my FA thinking against others' thoughts & posts, it gave me new tangents of exploring other ideas and other methods of research & FA but then coming across this "dark art" (to some... lol) on HC called TA, got me to wanting to understand it more as an unemotional check & balance of my FA processes.
So...I tend to use both now, not always to the best effect at times, but nevertheless I try to use both. Only way to get better... make some mistakes along the way. Just not too many and not too big.
I will say that FA still obviously governs my initial interest in a stock & then the potential entry based on impending or potential FA catalysts, so still not completely skilled or trusting in the TA entry at times....still evolving as most of you would know. Not that good yet at looking for TA price targets as not so reliant on patterns (occasionally trying to use as they offer that extra possible dimension) but more Ichimoku for supp / resist and poss breaks into trends and Heiken-Ashi for the trend changes / reversals.
On exits I am becoming more reliant on TA to unemotionally & visually give me the trigger and if I'm out early then so be it... I can always buy back in if the trend kicks again, but I'll take whatever profit is going and try to minimise whatever losses I make (and they r still there & always will be). continued below
