exit strategy

[suggy]

hi all

wonder if u can help. Im having real problems with an efficient exit strategy. I have a relatively good entry strategy based on MA's, RSI, and support and resistance. Should I just be looking for reversals of my entry criteria? I normally trade on a 1 min chart, so I get a lot of noise. Any help appreciated. :idea:

 

[oatman]

What market are you trading?

 

[suggy]

the dow cash intraday normally

 

[mmillar]

suggy,

Unfortunately, entry is the easy bit. :|

There are lots of exit strategies. You need to test them against your system to decide which works best for you.

1. As you say, use your entry system to give an exit signal.
2. Have a target price based on S/R levels. If you are using support/resistance levels in your entry then you should be able to use the next level as a target to get out. Look at Chartman's Dow posts for this type of strategy.
3. Have a target price based on your entry price. So exit after you have made 50 points.
4. Use a trailing stop. You can have it 1:1 ie. if the market moves up by one then your stop moves up by one, or 2:1 where if the market moves up by 2 then you move your stop up by 1 (or of course any other variation you want).
5. Time. Exit after x bars.
6. A combination of all the above.

When I test systems I try all the above to see which works the best (though 3 has never been a good exit strategy). A combination of one or two of them usually works best.

Cheers

 

[sidinuk]

I agree that target price exits are not usually a good strategy. They make you feel good, but will cut the good winners short and will reduce a systems overall profitability.

Personally I use a trailing stop and exit all positions at the end of the day, so a combination of 4 and 5.

 

[oatman]

There's nothing wrong with a target price, ie objective.
It gives you something to concentrate on. Once near or achieved, :cheesy: you can always run your trailer.

 

[warm_machine]

Personally avoid target prices for actual trading positions but do use them for forecasting. Exit is made when I feel time is right to do so.

 

[Mr. Charts]

Does the reason you went into the trade still apply?
If not, why are you still in it?

 

[suggy]

Personally avoid target prices for actual trading positions but do use them for forecasting. Exit is made when I feel time is right to do so.

I have seen several people saying they get out 'when it feels right', and to some extent I can see where you are coming from. But this feeling has to be based on several factors which you consciously or unconsciously notice. Have you never tried to narrow it down?

Mr. Charts, not sure I follow. There are criteria I have for entering a trade, however once they are met and I enter they are not going to stay the same. Say for instance I bought on an MA crossover near support backed up with a lowish RSI. Price and RSI are going to rise, so my reasons for entering the trade are not still there. Wonder if this is the context you meant? If not Im lost


thanks mmillar, I've got some thinking to do . . . :cheesy:

 

[warm_machine]

For me it's down to experience, suggy. I trade to a very strict routine so I know exactly what to expect and how much something is likely to move given any scenario/event you care to think of. It's about ensuring all of the bases are covered for every second I'm in the market - if anything is amiss, even if only slightly, then I exit.

 

[Mr. Charts]

Suggy,
If you enter long and the market turns against you, get out.
If you are long and it's still moving up, stay in; but think about taking partial profits if the move is weakening, half your position perhaps.
If it's a wiggle you've banked some profits and still have half running if it takes off again, but move your stop up to ensure you still have profits on the remaining half.
If it's a reversal then you have locked in profits on the first half and the second half will be stopped out still in profit.
Hope that helps.