Ok I feel that there was some good feedback regarding "The Best Way To Choose Lot Sizes", so I'd thought I would post another thread, this time regarding exits.
It seems to me a great irony of trading that we spend hours studying and studying, until we have those perfect conditions as given by our indicators to enter. So we place an order when (for example) RSI crosses 50, 5EMA crosses 10EMA, and my grandma falls asleep. When do we usually exit. When the price goes up 50 or goes down 25. How much sense does this make having conditions for our entries but random numbers for our exits?
I think that we should base our exits on the same indicators we base our entries on. Why would we stop monitoring the indicators after we entered the trade and blindly wait for the trade to either close in the black or red?
So my answer to this problem is to develop levels or conditions for our exits as well as our entries. I believe that one can increase winning percentage and possibly decrease the average loss. I am not yet sure what these levels are or how to determine them, but I believe this philosophy will be more profitable than the widely used current method.
I appreciate any and all suggestions,
andersenws
Note: In this thread and "The Best Way To Choose Lot Sizes", I am speaking in terms of mechanical trading systems and EAs. I realize many, perhaps all, successful traders use discretion in their trading. However, I am currently studying mechanical systems, and am not concerned with discretion right now.
It seems to me a great irony of trading that we spend hours studying and studying, until we have those perfect conditions as given by our indicators to enter. So we place an order when (for example) RSI crosses 50, 5EMA crosses 10EMA, and my grandma falls asleep. When do we usually exit. When the price goes up 50 or goes down 25. How much sense does this make having conditions for our entries but random numbers for our exits?
I think that we should base our exits on the same indicators we base our entries on. Why would we stop monitoring the indicators after we entered the trade and blindly wait for the trade to either close in the black or red?
So my answer to this problem is to develop levels or conditions for our exits as well as our entries. I believe that one can increase winning percentage and possibly decrease the average loss. I am not yet sure what these levels are or how to determine them, but I believe this philosophy will be more profitable than the widely used current method.
I appreciate any and all suggestions,
andersenws
Note: In this thread and "The Best Way To Choose Lot Sizes", I am speaking in terms of mechanical trading systems and EAs. I realize many, perhaps all, successful traders use discretion in their trading. However, I am currently studying mechanical systems, and am not concerned with discretion right now.
"Youth is the trustee of prosperity." - Benjamin Disraeli