Exiting an uptrend

[momothebored]

What's an optimal way of exiting an uptrend / upside breakout?

Most of the ride the stochastics, RSI etc are all overbought..

So how do you decide when to exit?

thanks

 

[natureboy]

Trailing Exits. I use Hawkeye Trend+Stops b/c it flattens and gives the market space when the trend pauses.. Something like Parabolic will keep trailing tighter and exit during a normal correction (with most settings).

Alternatively, you can use targets based on swings and swing ratio analysis/fib projections or measured moves.

For intraday, you can look at the Average Daily Range (5), this can be projected from likely hi or lo at beginning of session and give you an idea of maximum reasonably expected range for the day. I suppose that could be extended or contracted to other time periods.

 

[NVP]

Loss of momentum
Price action signals (key support / Resistance levels . failed highs, lows)
Targets hit

Millions of reasons to call it a day ....mostly they work

think about splitting your trade into smaller pieces as well...adopting different Exit methods on each

 

[NVP]

Trailing Exits. I use Hawkeye Trend+Stops b/c it flattens and gives the market space when the trend pauses.. Something like Parabolic will keep trailing tighter and exit during a normal correction (with most settings).

hey NB...........what do you think of Hawkeye ?

I met Anna and David recently at the London Forex Expo...they seem very genuine ....I didnt bite as the Hawkeye is very aligned to my own strengthmeter style of trading already .............but it is much fancier !

N

 

[natureboy]

i have the fatman and the trend+stops - it works most of the time. sometimes fatman falls out of sync, but usually its on point. I'd like to try their volume for FX indicator at some point soon. Combining what they do with what i do (patterns & multiple timeframes) is fantastic.. I wouldn't take every fatman signal, but in good context it rocks. Relative Strength gives both timing and direction (with pair selection in the case of Fatman)...and like i said the most distant trailing exit on the trend indicator (there's two of them far and barrier stops) is effective for holding trades

 

[FringFX]

What's an optimal way of exiting an uptrend / upside breakout?
Most of the ride the stochastics, RSI etc are all overbought..

regardless of your settings, oscillators like RSI and stochastics can stay overbought or oversold for as long as they can whenever there is a trend. do keep that in mind

 

[momothebored]

regardless of your settings, oscillators like RSI and stochastics can stay overbought or oversold for as long as they can whenever there is a trend. do keep that in mind

I don't think you read very well... that was my point.

 

[FringFX]

i did not read very well because your second sentence was grammatically ambiguous

your question is open-ended, it does have several possible answers. see the first two replies

 

[natureboy]

you could also use a money based algorithm, taking profits relative to your account and return goals, throwing technicals out the window. I don't do it like that, but maybe someone does.

Vic Sperandeo wrote about swing statistics, where you collect and study magnitude of movements in the price record (need to define swings for this) and determine what is the high probability amount of movement to expect for all trends (in 75% of up trends, this is the max), start exiting there from your trends... You could scale out and move up trailing exits. Those fewer bigger moves would be missed if you exited all out.

I'd think you'd need to classify such study into market types based on volatility and direction (Van Tharp recommends this), as a bullish intraday trend in EURUSD in the early 2000s was smaller than same from 2009

 

[Vicorka]

When stock is overbought it does not mean it is going to break down. It still may go up and there are many factors affecting it. I usually monitor changes in trend behaviour: change in volatility and volume. Volume surge at the top may lead to a reversal down as there could be shift in supply/demand balance. Increase in volatility may lead to reversal as it mean increase in panic trading.

Basically, I may use some indicators hat carry a volatility factor in their calculations: Ultimate Oscillator, True Strength Index, Volatility adjusted MACD. Plus I use Volume (Money Flow) Oscillators: Selling/Buying volume Oscillator, SBV Flow.

Again, it depends on many factors. For some stocks Stochastic and RSI could be good.

 

[ranman]

I agree that volume spikes usually occur when the trend is exhausted. If this volume surge also occurs when price enters a key supply or demand zone, a reversal will most likely occur. The zones are nice in that you see them long before price gets to them, so when the volume surge occurs, that is a great time to exit a long trend.

 

[wino59]

Loss of momentum

think about splitting your trade into smaller pieces as well...adopting different Exit methods on each

I agree with NVP... I look to scale out of a position, so if I am sitting on a good profit, and I think I may be at key resistance area or support area, I would take 50% of my position off, then let the rest ride... if it breaks through, then I keep moving my stops, and my scale out another 25% of the position, leave the remaining 25 % run, and tighten up stops.

Once I hit my target, I generally like to take the 50% off, move the stop loss on the remaining 50% to a break even, then manage it from there... hope that helps.

 

[malaguti]

What's an optimal way of exiting an uptrend / upside breakout?

Most of the ride the stochastics, RSI etc are all overbought..

So how do you decide when to exit?

thanks

a break of a trend line always works for me