Price Action and Exits

[Purple Brain]

I’ve read on numerous occasions that it’s best to allow price action to ‘tell’ you when to exit. The only problem is I’ve never read any explication of what this means precisely. Especially for a raw recruit like myself where the nuances and insights have not had time to establish themselves into my psyche (ignoring for the moment my personal lack in providing such a flinty and poor soil in which such things must try and find a foothold) it’s a tempting theory, but one which is seemingly out of my grasp. I’ve tended to assign a target based on standard technical support and resistance levels, but it’s always a toss-up when the price reaches this level whether to bail out and take profits or hang on to see if it’ll go further.

I have a squadron of exit indicators (7 in total) any one of which normally gets me out at a level where subsequent price action confirms it was a sensible enough exit. But occasionally after a bit of a rest, the price takes off again. Do you more experienced traders use targets based on technical support and resistance levels and if so, how do you decide whether to take profits or hold on? Is there any reality to the phrase relating to ‘price action’ in which it gives away secrets of its imminent intent?

There appears to be consensus that exit is far more significant than entry, yet the majority of trading discussion seems to focus on entry. Is that because it’s a lot easier to call an entry than an exit? Getting in anywhere along a trend looks good in retrospect and yet we tend to expect the exit to be at the major turning point. Is that the issue, that I have unrealistic expectations of my exits compared with the latitude I allow myself on entries?

 

[kimo'sabby]

There appears to be consensus that exit is far more significant than entry, yet the majority of trading discussion seems to focus on entry./QUOTE]

That's because exits are harder to evaluate than entries...anyone can enter the market.

Ultimately, your exits will make or break you (stops and targets)

Be mindful, amateurs have a real bad habit of '*******ising' everything.

 

[Purple Brain]

I sense the asterisks are masking something that is quite important. Can you rephrase what amateurs have a bad habit of doing in a way that will allow the significance to become clear?

 

[kimo'sabby]

I sense the asterisks are masking something that is quite important. Can you rephrase what amateurs have a bad habit of doing in a way that will allow the significance to become clear?

hahaha. i agree. B a s t a r d i s i n g.

 

[ffsear]

Price action never worked for me! My exits are purely based on time.

 

[kimo'sabby]

Price action never worked for me! My exits are purely based on time.

how u using time?

 

[ffsear]

I simply close my trades between 4 and 4.30 uk time. Regardless of where they are.

May sound crazy to some, but i struggled for years with exits and this way keeps it simple and removes the emotion from it.

 

[Liquid validity]

I simply close my trades between 4 and 4.30 uk time. Regardless of where they are.

May sound crazy to some, but i struggled for years with exits and this way keeps it simple and removes the emotion from it.

Not to me, makes a lot of sense.
I don't generally exit at a set time, just flatten all at 2140gmt.
However, I can tell you that the flatten all at 2140 turns the most profit.
Not exactly surprising that the concentration of losing trades is earlier in the day.
With me entry time is much more rigid.
In a way what I do has more in common with swing trading, just no overnight holds.

 

[kimo'sabby]

Not to me, makes a lot of sense.
I don't generally exit at a set time, just flatten all at 2140gmt.
However, I can tell you that the flatten all at 2140 turns the most profit.
Not exactly surprising that the concentration of losing trades is earlier in the day.
With me entry time is much more rigid.
In a way what I do has more in common with swing trading, just no overnight holds.

Time plays? futures or options?

 

[Liquid validity]

Time plays? futures or options?

No, just based on session timing.
Like I say, main reason was to avoid overnights.

Why I said it had much in common with swing trading
is down to the fact that a trade can be opened around
U.K. sesh start and closed at U.S. close.
Obviously not every trade will do so. and you wouldn't want it to either.

Currently spot FX, get a decent broker (changing to LMAX soon) with low costs and its
no different than currency futures, with the added bonus of greater
position sizing flexibility compared to single contract futures denomination.
Given a large enough bankroll, futures would not have the contract sizing issue.
Saying that, I'd want a 150-250k roll for that to be the case.

 

[kimo'sabby]

No, just based on session timing.


maybe one of the best reasons (arguably)

 

[Liquid validity]

maybe one of the best reasons (arguably)

For what I do, and the aims I have, I agree (but I would say that...:cheesy.
The thinking behind it was that generally speaking, unless there is an
asian element present, the UK and US sessions make up the bulk of a swing trade
anyway.
My thinking was why hold through the asian and overnight, when generally,
(instrument dependent) there is little upside to do so, for more risk.
Its a fair point that costs are lower with short term swing trading though.

Upside - no overnights, stops can be tighter.
Downside - costs are higher, but are at least consistent.

 

[fatowl]

There appears to be consensus that exit is far more significant than entry, yet the majority of trading discussion seems to focus on entry./QUOTE]

That's because exits are harder to evaluate than entries...anyone can enter the market.

Ultimately, your exits will make or break you (stops and targets)

Be mindful, amateurs have a real bad habit of '*******ising' everything.

100% agree with kimo'sabby here. Think of it like the competition is really high on picking the right entry, and the competition is really low on picking the right exit. Hence you have all those trading discussions on entry and not on exit. Pick your battlegrounds wisely.