Need some objective rules/formulas to stop-gain

[WmWaster]

Need some objective rules to stop-gain

Hi.
I have problems about closing my positions.
Quite often I close too early, or miss the chance to close my positions.
I need to close my positions in "better" price (it doesn't need to be the highest/lowest as it's impossible).

Does anyone know if there're any objective rules or technical analysis which can help to determine the highs/lows of one wave?
I need to use it in both day & non-day trade.

Thank you!

 

[sjalmond]

'Better' stop-profits?

I need to close my positions in "better" price (it doesn't need to be the highest/lowest as it's impossible).

How do you define 'better'? Do you mean stop-profit orders? I've recently seen a £400-profit position-trade close as £100-profit on a downward spike and I'm fairly happy with that. Stop-loss orders are a trade-off between given profits back and being stopped out by market noise. We've each got to decide what our psychology allows vis-a-vis 'the one that got away'.

When I finish my analysis, I'll be looking at running several positions in parallel - one to run with a medium-loose stop-loss and no stop-profit, one to grab profits with a stop-profit order. Stop-profit orders trade grabbing profits caused by market noise (e.g. up-spikes) and letting winning positions run; hopefully this will give me a better (bank) balance. I've also got to consider risk-reward ratios. My motto on stop-profits is generally don't take the lot and run, take a little and walk. YMMV.


Steve

 

[MaximusDollarus]

Trade Management

Need some objective rules to stop-gain

Hi.
I have problems about closing my positions.
Quite often I close too early, or miss the chance to close my positions.
I need to close my positions in "better" price (it doesn't need to be the highest/lowest as it's impossible).

Does anyone know if there're any objective rules or technical analysis which can help to determine the highs/lows of one wave?
I need to use it in both day & non-day trade.

Thank you!

When you get into a trade it is a good idea to have a price 'area' you would like to see reached. This should be an objective and realistic price area and should fit the type of trading that you are doing for the particular trade (trading time frame...day-trading, swing-trading, investment-trading, etc...). Once that price has been his (or close enough) try setting a limit order to sell (or buy back if you are shorting) 25% to 50% of your position. The remaining balance of your shares can then be left to do whatever it's going to do as you continue to trail your stop-loss order. By doing this you'll be doing a couple of things. One, you'll be securing a gauranteed profit. Two, you'll be reducing the emotions that may (or may not) be effecting your decision making process when trying to exit the trade at a gain. I usually sell one-third or one-half of my position once the price action reaches a resistance area (or a support area if I'm shorting) and then allow the remaining position to either continue making a profit or go against me and stop me out. Either way, I'm securing a profit and freeing up some more capital to get into or add to another developing trade.

As for candlesticks, I don't put too much emphasis on any certain types of candles, but if I am going long and happen to see a "doji" or "spinning top" candlestick that is in/near the trend resistance area then I will more than likely sell a part of my position in order to play the odds, which I do consider when trading. The biggest reason that people have a difficult time getting out of a trade is due to two major emotions...fear and greed. You're acting fearful if you get out too early and you're greedy if you get out too late. By selling a part of your position then you'll limit your emotion-based decision and start playing the odds more effectively.

Hope this helps.

 

[WmWaster]

How do you define 'better'? Do you mean stop-profit orders? I've recently seen a £400-profit position-trade close as £100-profit on a downward spike and I'm fairly happy with that. Stop-loss orders are a trade-off between given profits back and being stopped out by market noise. We've each got to decide what our psychology allows vis-a-vis 'the one that got away'.

When I finish my analysis, I'll be looking at running several positions in parallel - one to run with a medium-loose stop-loss and no stop-profit, one to grab profits with a stop-profit order. Stop-profit orders trade grabbing profits caused by market noise (e.g. up-spikes) and letting winning positions run; hopefully this will give me a better (bank) balance. I've also got to consider risk-reward ratios. My motto on stop-profits is generally don't take the lot and run, take a little and walk. YMMV.


Steve

I refers to the "exit strategy" - how to exit at a better place.
Eg: If atrend starts and you just exit in the middle of the trend, it is a bad exit.

I just wonder if there're any technical indicators which can help me predicting the end of a trend/wave.
Any suggestions?

 

[Jack o'Clubs]

Crikey, this is going to depend on so many factors that are specific to you its almost impossible to answer. But since you ask: I use MACD divergences a lot of the time, ie the when long of a stock and its MACD fails to make a higher high, but the stock is still rising, then I ditch, or reduce my position. This works for me, but my trading style, products traded, etc are likely to be completely different to yours. Its also worth noting that I don't use the standard 12/26/9 MACD inputs but have tweaked them, again to better suit my perspective which is probably a bit longer term than many who post on these boards.

 

[MaximusDollarus]

I refers to the "exit strategy" - how to exit at a better place.
Eg: If atrend starts and you just exit in the middle of the trend, it is a bad exit.

I just wonder if there're any technical indicators which can help me predicting the end of a trend/wave.
Any suggestions?

Elliot Wave Analysis, if understood, can help you out with this...but I must warn you that Elliot Wave Analysis is fairly complicated and even more so on short term plays. In fact, I really wouldn't recommend Elliot if you are day-trading, but if you're trying to anticipate the end of a trend then you should look into Elliot because it's pretty fascinating stuff.
The main precepts are that you can count on waves and correctional waves to last a certain amount of time, but more directly by the price action related to the most recent swing highs and swing lows. There are three major "pro-movements" to an Elliot wave with two waves moving contra-positive. Within each of these waves (and depending on your time frame of trading...) are possible 'counter waves' and/or correctional waves that are labeled "A,B, and C" respectively. After the correctional waves have played out then the next 'pro-movement' can be anticipated. By the end of the third movement in favor of the current trend it is reasonably fair to say that the current trend is over or moving into a larger series of correctional waves before it either goes back in the direction it was going or reverses trend. Like I said, Elliot is not the easiest to understand or implement and is much more difficult to try and explain on a trading blog!
Sorry about that.

One of the biggest tools I use (other than Elliot Wave Analysis) to determine the trend and to attempt to predict the end or relative strength of the trend is to use multiple time frames. If your setup chart was on the fifteen minute chart then I will immediately check out the next 'higher' time frame, which would be the thirty-minute (or one hour...). By checking out the larger trend on the larger time frame I can see just where the steam of my current setup is at and make a decision on how I feel about the trade in general. If the larger time frame looks exhausted and/or is challenging resistance (if I'm going long) then the liklihood of me actually going through with the trade diminishes greatly. In an idylic situation, I would like to find a good setup on the fifteen-minute and then confirm the trend on the thirty minute, hopefully seeing that the stock is in the third wave of an Elliot wave movement (or even a fourth wave, which is correctional, but at least it will tell me that an upcoming fifth wave -- which normally breaks through resistance -- is on the horizon). Once I have confirmed the setup then I will quickly look at the 3 or 5 minute chart for a good entry point....preferrably a point where the trend looks like it is reversing or consolidating. It may sound like I'm doing a lot of work just to find a good entry point, but with my setup on eSignal I already have all three timeframes loaded and running on one of my monitors and this whole process usually takes a few moments...seconds.

The MACD is a decent tool to use, but you should be aware that it is a lagging indicator and by using it exclusively you will more than likely "get in" late and "get out" late. Just be aware of what the MACD actually measures and how it translates into information that you would use to make a decision.

Good luck. :cheesy:

 

[WmWaster]

Elliot Wave Analysis, if understood, can help you out with this...but I must warn you that Elliot Wave Analysis is fairly complicated and even more so on short term plays. In fact, I really wouldn't recommend Elliot if you are day-trading, but if you're trying to anticipate the end of a trend then you should look into Elliot because it's pretty fascinating stuff.
The main precepts are that you can count on waves and correctional waves to last a certain amount of time, but more directly by the price action related to the most recent swing highs and swing lows. There are three major "pro-movements" to an Elliot wave with two waves moving contra-positive. Within each of these waves (and depending on your time frame of trading...) are possible 'counter waves' and/or correctional waves that are labeled "A,B, and C" respectively. After the correctional waves have played out then the next 'pro-movement' can be anticipated. By the end of the third movement in favor of the current trend it is reasonably fair to say that the current trend is over or moving into a larger series of correctional waves before it either goes back in the direction it was going or reverses trend. Like I said, Elliot is not the easiest to understand or implement and is much more difficult to try and explain on a trading blog!
Sorry about that.

I'm not sure if it is my understanding to Elliot Wave is not enough, but I do feel this analysis is (nearly) self-fulfilling or self-proving due to its subjectivity, flexibility & vague rules!

Say if the rising wave is in the third phrase, then it starts to go down. Some might say that the third phrase is over. The corrective wave starts.

So if it keeps going down, it can be confirmed as correctional waves.
However if it rises back after a small drop, you are criticised as counting the waves incorrectly, but NOT the problem of the wave analysis itself. It is still in the 3rd phrase.

The above is just a simple way to show the problem of Elliot Wave, so don't be too particular! Some of its concepts might be inspiring, but it doesn't mean the whole Elliot Wave is powerful (good predictivity) since we can never know if we count correctly beforehand.

The analysis can be always correct since it can be fitted in in different ways by different approaches/views. If the approach/view A makes Elliot Wave looks wrong, then use approach/view B. If not, approach/view C and so on.

That's my 2 cents!
And it might be wrong!

 

[WmWaster]

One of the biggest tools I use (other than Elliot Wave Analysis) to determine the trend and to attempt to predict the end or relative strength of the trend is to use multiple time frames. If your setup chart was on the fifteen minute chart then I will immediately check out the next 'higher' time frame, which would be the thirty-minute (or one hour...). By checking out the larger trend on the larger time frame I can see just where the steam of my current setup is at and make a decision on how I feel about the trade in general. If the larger time frame looks exhausted and/or is challenging resistance (if I'm going long) then the liklihood of me actually going through with the trade diminishes greatly. In an idylic situation, I would like to find a good setup on the fifteen-minute and then confirm the trend on the thirty minute, hopefully seeing that the stock is in the third wave of an Elliot wave movement (or even a fourth wave, which is correctional, but at least it will tell me that an upcoming fifth wave -- which normally breaks through resistance -- is on the horizon). Once I have confirmed the setup then I will quickly look at the 3 or 5 minute chart for a good entry point....preferrably a point where the trend looks like it is reversing or consolidating. It may sound like I'm doing a lot of work just to find a good entry point, but with my setup on eSignal I already have all three timeframes loaded and running on one of my monitors and this whole process usually takes a few moments...seconds.

Hi. I still use different time frames to determine the rend & entry/exit point.
But I'm interested in how you use 1/5min charts to determine entry/exit point. Elliot Wave?