What kind of exit indicators do peope use to exit when trend following?

[Adecco]

Just enquiring what kind of exit indicators do people use when letting proifits run until a breakdiown of a trend?

I've just started using the 50 ema. I trade daily charts and like to get to breakeven using various S&R points....and then let teh 50 ema catch up to breakeven and i then trail that for an exit strategy.

I suppose it makes no difference really. Or does it?

In my own head im thinking an instrument can bahave anyway and we can only tell with hindsight what the best indicator to use.
So as long as i am using some indicator that keeps me in a trend while its going in my favour - anbd gets me out when the trend breaks down then im thinking i cant do any more than that.

Am i oversimplifying this? Or is teh above a fair analysis?

 

[Jason101]

Lower lows

 

[jgtrade]

An indicator I like to use is ADX. It's used to measure the strength of a trend. Seeing as you are trend following and want to stay in the trend as long as it's strong then an exit could be when ADX drops below 25 for example.

You'd have to test what levels work best for the timeframes your trading in.

How are you entering the trend in the first place Adecco?

 

[Adecco]

An indicator I like to use is ADX. It's used to measure the strength of a trend. Seeing as you are trend following and want to stay in the trend as long as it's strong then an exit could be when ADX drops below 25 for example.

You'd have to test what levels work best for the timeframes your trading in.

How are you entering the trend in the first place Adecco?

I basically enter if i see an obvious trend. Nothing too fancy - just a basic cursaory look at a chart and if it has been on an obvious trend for teh last num ber of weeks/months then i get in.
I normally use a nearby S/R point - or a MA of some dexscription as a Stop loss. Its subjective really i guess depending on teh instrument anbd what indicators are nearby. (I try to have my SL between 5% and 10% away normall)

But basically i try to get my SL to breakeven as soon as i can if there is any technical reason availabekl for me to do so.

And after that its just a case of seletcing soem random indicator to get me out of a trend - hencer thsi thread.
I guess theres hno great indicator - as long as you have something to keepo you in in a stroing trend - and that gets you out in teh event of a trend breakdown.

But i was just curios what pothetr people use.

My excit can change depending on how teh instruiment behaves.
E.g. if a sharp move against me i woudl stick with original MA exit - but if my MA slowly catches up with price i may change to a slower MA.
Some you win and some youlose yusing thsi method. Proibably evens out overall.

Maybe i woudl be better using teh same exit ebverytime though to avoid any stresses in selecting teh exit.

 

[jgtrade]

"Maybe i woudl be better using teh same exit ebverytime though to avoid any stresses in selecting teh exit."

My best advice would be to know exactly what indicator you're going to use to exit the trade BEFORE you even get in the trade.

You should keep the exit strategies consistent until you know what works and what doesn't work. I would suggest something simple to try first like a moving average cross over to take profits. Then keep the stop loss further away, well away from market noise. Use lower lows or "donchian channel" for the stop.

 

[ctpelot]

I would suggest looking at the ATR Trailing Stop

 

[Jason101]

I use ATR to start with and if the trend continues I go on to a break of lower lows.

 

[nunrgguy]

Take near term volatility into account. ATR is a very blunt instrument. But tbh, if we're talking calculated indicators, don't use any of them, all sh1te.

 

[Jason101]

Take near term volatility into account. ATR is a very blunt instrument. But tbh, if we're talking calculated indicators, don't use any of them, all sh1te.

What would you suggest then nunrgguy?

 

[tomorton]

I don't trust indicators though I use EMAs to help confirm trends, entry opportunities and best prices for these.

Initial stop for me is TA-based price at which the trend fails to confirm its direction. That gives me £x risked per trade, after that I use (best high achieved - £x) for trailed stop.

However, I like Ed Ponsi's FX-Ed trend-following strategy, and in that he uses ATR - entry - 50% of the current ATR, trailed. He doesn't say so but I believe his ATR used is 10-day. I don't like ATR and I don't want to start using it in prefernce to lower lows etc. so I would love someone to prove to me that relying on Ed's ATR stop won't work.

 

[Jason101]

I don't trust indicators though I use EMAs to help confirm trends, entry opportunities and best prices for these.

Initial stop for me is TA-based price at which the trend fails to confirm its direction. That gives me £x risked per trade, after that I use (best high achieved - £x) for trailed stop.

However, I like Ed Ponsi's FX-Ed trend-following strategy, and in that he uses ATR - entry - 50% of the current ATR, trailed. He doesn't say so but I believe his ATR used is 10-day. I don't like ATR and I don't want to start using it in prefernce to lower lows etc. so I would love someone to prove to me that relying on Ed's ATR stop won't work.

Ah, Tom, what I do is when I use ATR it is always in conjunction with the last swing low.
(Edit: I would not really class ATR as an indicator, more as a tool)

 

[Will Duxon]

I’m in the process of testing charts based on a Stochastic RSI Strategy for which I understood the basis for entering trades, but was not so clear on what criteria to use for exits. However, reading this tread reminded me of having seen videos on YouTube that described how to base exits on ATR, so I’m thinking I’m going to go back and have a closer look at those clips, now that I might actually find the information they contain applicable.

 

[Jason101]

What kind of exit indicators do people use to exit when trend following?

Pick an exit, whatever rocks your boat. Then obey that exit, not because the exit is right but because it is right because it was created in conjunction with your money management plan.
The technically right exit in trend following is just a rabbit hole that will mess with your head which is not helpful. You need the head clear for the important things.
Pick an exit signal- ma's, lower lows, % trail, ATR, bolly.b..... whatever..
What's important is the "tag on" of the money management, account risk, correlated risk, trade capital risk, trade unprotected profit risk, account unprotected profit risk, pyramided risk, your p&l to date, your targets to date, notional accounts risk, news driven event risk, macro changes, your availability and most importantly your feelings, it is emotional leaving money on the table or giving back profits, how do you feel about it? You do not know what the market is going to do, all you can do is define your version of a trend, when it is trending be in, when it is not, be out.

 

[dfl3tch3r]

I don't use any indicators for the exit, nor the entry...Use price alone!

Hint: Use candlesticks because they tell you a lot about the market sentiment.
Going long: If you're trying to exit as near as possible to a top for instance then the price/candle type/formation will obviously tell you everything you need to know in order to respond.
And if the price is topping out then pull your stops up. If you fail to do that and price drops followed by the moving averages crossing (I use 10, 30) then wait, if your lucky enough for a pullback inside the 10, 30 and then pay more attention to candles/price. On this 2nd chance you exit...Pullback entry and exit is part of a bigger strategy obviously.

 

[Kyleice]

http://www.morpheustrading.com/blog/trading-psychology-setting-stops/ This is pretty helpful when looking at when to exit.