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How do you decide your exits? 13 replies

Dear Full time/Part time Traders – Thanks for your time and help 7 replies

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How do you time your exits?

  • #21
  • Edited 2:11pm Jan 14, 2020 2:00pm | Edited 2:11pm
Quoting Oldtraderman
{quote} Hi, Trailing a stop in some way, i.e. bringing the stop up as the trade progresses favourably, clearly makes sense as you are both reducing initial risk and improving the current R:R of the trade. It's really a matter of balancing how much room you want/need to allow a trade to potentially go further with how much open profit you are prepared to give up. How you do that is again is largely a function of your trading style and your psyche. However, scaling out makes less sense to me. If you progressively scale out of a profitable position...
You make some excellent points Oldtraderman.

I more or less agree with everything you wrote. As you said, 'it's really a matter of balancing how much room you want/need to allow a trade to potentially go further with how much open profit you are prepared to give up' and I think that's where the trading strategy comes in. Some strategies are better suited to scale out, and others might be better with a TS or TP.

I especially appreciate the point you make in your second paragraph about it being mathematically disadvantageous to scale out. That absolutely can be true and makes me think I need to be more careful in my words... Its common knowledge in trading that you should take an early partial profit to lock in some gains, but I've been adamant on the forum about not doing that because of the point you make. On average that's probably the wrong move. Where I think scaling out makes sense is when the odds have changed, but momentum is still in your favor.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #22
  • Jan 14, 2020 2:24pm Jan 14, 2020 2:24pm
Quoting Dasilvja
then moving my stop to breakeven
I don't recommend doing that.

Your SL should be somewhere meaningful; as in, if the price goes here I know I'm wrong and I'm out. My entry price is relatively arbitrary so if my trade becomes successful I wouldn't adjust the SL to BE since my BE isn't a significant price level.

I also wouldn't move a SL to BE simply for the sake of eliminating risk. While you're not risking your balance, you're still risking your equity and that has more relevance in my opinion.
Self-sufficiency is the greatest of all wealth. - Epicurus
  • #23
  • Jan 14, 2020 4:08pm Jan 14, 2020 4:08pm
Quoting hayseed
{quote} //----- hey dasilvja..... you might hold the record on time in demo..... your patience is admirable..... having 2 accounts will get past the no hedge rule..... one short trades only.... another long trades only..... ea's and such can easily be coded to recognize the proper account.... as for your question here, my approach depends on timeframe.... tf's below the 240 uses simple multiples of atr..... 240 and above, uses the average length of 240 zigzag..... this almost assures 2 things..... i will not max the trades full potential and will...
lol, Hayseed, I was learning on and off for a long time. I blew a couple small accounts along the way as well. It wasn't until last summer that I started really focusing on learning this properly and I wouldn't even say until December 1 last year that I started trading demo with the intention of doing the best I could so I could honestly evaluate my ability. No playing games or placing trades "just cause - just to see what happens". I've been trading like it means a lot to me. I've been doing - not terrible. 3.7% ROI last month, roughly with 8.7% MDD.... and I'm at 4.6% ROI so far this month with only a 3.24% MDD Goal is 10% ROI for the month with <10% MDD.

Ef5, you make some good points. Moving the stop to breakeven does seem kind of... reckless? Compared to placing at a level with significance. However, I recently spoke to a pro 25 year veteran trader who used to be on the Chicago Board of Trade and he does it this way. Not to mention when he's trailing his stop, he said he doesn't even care about market structure - he just asks himself, "How much am I willing to pay to stay in the trade" and that's how chooses his next SL location. Literally a dollar amount related to his capital, not the currency pair. His method is very much based on long-term probabilities. More mathematical and less analytical, but it works for him.

Point is, there are different ways to do it. I think I prefer to move my stop to breakeven just because I'm still pretty new and it gives me peace of mind really quick. lol When I get more comfortable and confident, I think I would prefer to give the pair room to move and wait until there is significant market structure to move to.
  • #24
  • Jan 14, 2020 4:46pm Jan 14, 2020 4:46pm
Quoting Ef5
{quote} I don't recommend doing that. Your SL should be somewhere meaningful; as in, if the price goes here I know I'm wrong and I'm out. My entry price is relatively arbitrary so if my trade becomes successful I wouldn't adjust the SL to BE since my BE isn't a significant price level. I also wouldn't move a SL to BE simply for the sake of eliminating risk. While you're not risking your balance, you're still risking your equity and that has more relevance in my opinion.
I second that... Many traders think they can move it to "break even" in a way RISKING nothing for EVERYTHING... Yeah, if life would be that simple.. The trader(s) I know that were doing that... do not trade anymore but they were 100% in themselves at the time... Also... I can not stress enough that one have to let trade "breath" aka leaving "turning radius"... And wait for the TANKER to turn... Markets move like CRUISE SHIPS... sometimes they must go other way first in order to turn Anyway, no rules either-wise we would already be billionaires since we would have the edge But just saying that this is a classical think that would give me a clue with what I am dealing with... Also, if one would be able to bet on Break Even, one could bet with crazy leverage...

Let me put it this way... Math/stat does not have the magic formula how to be successful in one if the most complicated areas known to man, because trading includes everything and everyone, reflects all there is known and unknown, but math/stat sure as hell can show why some internal logics are flawed... But that is irrelevant if someone is a believer in either way.. either that it is or that it isn't possible
Can you afford to take that chance?
  • #25
  • Jan 14, 2020 4:52pm Jan 14, 2020 4:52pm
Quoting TudorIoan
Hey all, if you allow me... about RR, for example. Risk Reward Ratio is irrelevant on the long run. Why? Because whatever you do, anyway you put it, it's a 50-50 game all along. (note: managing positions strictly technically, if we totally ignore the fundamental view) Demonstration (Consider each trade for 0.1 Lot size.) - e.g. if you aim for +20 pips, and fix yo SL at -20pips, it's a RR 1:1. The TP has 50% chances to get hit. The SL has 50% chances to get hit. Just maths. On the long run (say 1000 trades), if you keep going like this, you may probabily...
One of the best posts ever! I exhausted shit out of me trying to explain this to rookies... I mean I knew a trader that was a BALLER and BEGINNER... Then he swallowed some loses and began to learn... And one of the first things he picked up was this R:R... Like "ultimate loss preventor", "risk exposure limiter"... and unlimited PROFIT possible... Sure the "logic" might work in one or a few trades since obviously. it is better to risk 10USD to gain 100USD than to risk 90USD to gain 110USD... But as you "model", project this... you see the bigger picture of what this RR crap (in 99% cases) really is.. Just a distraction and FAKE edge

Should anyone prove me wrong, just bring me 22x R:R 1:1 signals (TP20 in eurusd case) and I will make you at least a millionaire if not billionaire (you do not even have to deposit, just bring the divine magic dust - your ALADIN) while I shave plenty for myself along the way...

Take care ppl, that above was suppose to be HELPING post... But to each it's own and I might be wrong But sure as hell math/stat is a powerful tool as science (process of elimination) is for at least ELIMINATING what is crazy... still awaiting the formula but to get there we might maybe at least throw out the garbage first
Can you afford to take that chance?
  • #26
  • Jan 14, 2020 6:34pm Jan 14, 2020 6:34pm
Quoting TudorIoan
Hey all, if you allow me... about RR, for example. Risk Reward Ratio is irrelevant on the long run. Why? Because whatever you do, anyway you put it, it's a 50-50 game all along. (note: managing positions strictly technically, if we totally ignore the fundamental view) Demonstration (Consider each trade for 0.1 Lot size.) - e.g. if you aim for +20 pips, and fix yo SL at -20pips, it's a RR 1:1. The TP has 50% chances to get hit. The SL has 50% chances to get hit. Just maths. On the long run (say 1000 trades), if you keep going like this, you may probabily...
Hi
Your win rate starts at 50%(RR1/1) then falls to 33% when you increase the tp (RR1/2) What happens to the results if I find a way to increase the win rate slightly to say, 45%?
  • #27
  • Jan 14, 2020 8:29pm Jan 14, 2020 8:29pm
Answering the OP topic question:

Standard deviation. I use a fixed target based on 95% of past variance. I've found that scaling, trailing and other tricks are good for boosting dopamine/confidence but in the long run it's more profitable to hold for the statistical edge (while not allowing a win to turn into a loss of course). People/machines react the same way when something looks expensive/cheap. They exit and reverse positions. That line is most often very close to 2.5 standard deviations.
  • #28
  • Jan 14, 2020 11:18pm Jan 14, 2020 11:18pm
It's done in sequence
Hard stop, break-even, stop moved to take profit, exit at desired r:r or key s/r.
  • #29
  • Jan 15, 2020 1:20am Jan 15, 2020 1:20am
Quoting Nikl
{quote} Hi Your win rate starts at 50%(RR1/1) then falls to 33% when you increase the tp (RR1/2) What happens to the results if I find a way to increase the win rate slightly to say, 45%?
Hi, Nikl, I'm very interested on how you can increase the win rate from 33% to 45%. I'll write a book explaing what happens just if you can do that, ...it would worth my effort, honestly

Note, the momentum continuation is not something you can rely on. Because it obeys to the same 50-50 universal rule. Meaning it may continue or it may not ...by the same probability. Simple put, the trend (or counter-trend) is only about 50% your friend... the rest, is not your friend

So I'm all eyes and ears to any solid verifiable idea which can grow an account without a position management artifice. (and except fundamentals)
I'm sure we can all agree that it would be the equivalent of the holy fkn grail, a money machine, and everybody are going to be millionaires, which actually nullifies the concept of being rich LOL
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  • #30
  • Jan 15, 2020 2:34am Jan 15, 2020 2:34am
Quoting auricforecas
{quote} I second that... Many traders think they can move it to "break even" in a way RISKING nothing for EVERYTHING... Yeah, if life would be that simple.. The trader(s) I know that were doing that... do not trade anymore but they were 100% in themselves at the time... Also... I can not stress enough that one have to let trade "breath" aka leaving "turning radius"... And wait for the TANKER to turn... Markets move like CRUISE SHIPS... sometimes they must go other way first in order to turn Anyway, no rules either-wise we would already be...
Hey, it sounds like your journey is going well and you are obviously much wiser and thoughtful than some.

On stats - be very careful. Many who use them are using them in a flawed manner and don't know it (eg, hello Mr Bollinger). A rant for elsewhere.

Anyway, I was going to say that exits depend on how you trade, which may seem circular, but it isn't self evident and you have the hang of it. If you are scalping or something with a view to quick in and out, yes, stops must be tighter than if you were a trend trader and must be very generous allowing the market to breathe.

What I call a healthy correction (and stick with it) would be a signal to exit for many. Or even trade against the trend, often profitably.

I like to remove what I call "constraints." They can only be detrimental to my trading, and is true in general (its an economics thing). Having an exit stop as a function of the size of my account is a constraint. Begone!
  • #31
  • Jan 15, 2020 2:52am Jan 15, 2020 2:52am
Quoting TudorIoan
{quote}Note, the momentum continuation is not something you can rely on. Because it obeys to the same 50-50 universal rule. Meaning it may continue or it may not ...by the same probability. Simple put, the trend (or counter-trend) is only about 50% your friend... the rest, is not your friend
Please clarify this universal 50/50 "rule". I've actually never heard of it, and trust me, I've been around a while.
  • #32
  • Jan 15, 2020 3:52am Jan 15, 2020 3:52am
Quoting LloydOz
{quote} Please clarify this universal 50/50 "rule". I've actually never heard of it, and trust me, I've been around a while.
Hi, Loyd. It's pretty simple. 50/50 rule means that at any moment in time or level, the odds are 50% for the price to go up and 50% to go down. No matter what position management artifice.

Chart history can be really "interesting", but there's no element which it may repeat itself frequently enough to allow you to build a profitable trading strategy on the long run. Trend, range, overbought/oversold situations, simple/complex indicators, simple/complex patterns, ...all tools/techniques included. None of them reapeats itself more than 50% of the cases.
Funny, maybe even less than 50%, ...which is the explanation for the fact that a ridiculous percent of ~90% of traders lose money trading on the long run. Because "normally" it would be like 50% to win and 50% to lose ...I call this odds aberration "the pattern trap" ...because it allows you to lose even more money than if you would flip the coin to pick trading direction

My demonstration above shows mathematically that position management based on RR doesn't help at all on the long run.

I have reffered only to the classical RR technique, because there is also another fascinating position management trick used among the talented gamblers... the martingale magic style ...but that's another "book"

Take care out there, you all !
Member
  • #33
  • Jan 15, 2020 5:29am Jan 15, 2020 5:29am
You will have to figure out your exit plan!!!
No one else can , particularly know it all FF gurus.
https://futurestrader71.com/march-7t...nt-techniques/
on a postive roll...
  • #34
  • Jan 15, 2020 5:55am Jan 15, 2020 5:55am
The most of the FF experienced trading people are beyond all those popular videos, trading books, chief analysts' classes, "legendary" trading lines. There are tones of crap about trading everywhere.
The only ones who can really benefit from those videos, books and classes are the authors ...by selling them to the nooobs They never make real money applying their theories.

Nobody actually likes the naked truth ...because truth doesn't sell anything ..because is boring Hope is everything

They even built a beautiful city on "hope", Las Vegas. Works so fine !!! Who can argue with that successful business ...pure gambling
People need so bad to fly high overfilled with hope ...but reason use to cut wings and spoil enthusiasm ...and that's so depressing for many

Truth tellers are the most hated, ...it's almost "natural" to be that way
Member
  • #35
  • Jan 15, 2020 6:13am Jan 15, 2020 6:13am
Attached Image
on a postive roll...
  • #36
  • Edited 6:36am Jan 15, 2020 6:25am | Edited 6:36am
Quoting TudorIoan
{quote} Hi, Loyd. It's pretty simple. 50/50 rule means that at any moment in time or level, the odds are 50% for the price to go up and 50% to go down. .....another fascinating position management trick used among the talented gamblers... the martingale magic style ...but that's another "book" Take care out there, you all !
Hi TudorIoan - Thankyou for an introduction to basic theoretical probability theory, one that is applicable to the process of say flipping a fair coin or rolling a dice - "at any moment". That is the universal 50/50 "rule"?

This instantaneous process is such that each toss is independent of anything previous - there is no memory or persistence, for example. It is free of temporal effects.

I think that everyone would accept that in any series of tosses, heads will appear approximately 50% of the time. This is the law of large numbers that casinos seem to have cottoned onto. Thems really clever, eh? In theory, a martingale play would work, given a 50% chance (or maybe even less). Doesn't take any talent.

The process by which market prices are generated is not the same. For example, rescaled range Hurst analysis provides evidence that the process generating market prices is persistent with memory effects. Correlation analysis also reveals evidence of multi fractal structures in the sense that price dynamics exhibit similar Hurst exponents.

Other studies have demonstrated that while computer generated numbers follow a generally flat cycle process of around 10 (due to imperfections in the process of generating random numbers, there is an aliasing effect), the same studies show that there are persistent varying, yet often ephemeral, cycles in market price data, and at other times none

So, there is your introduction which relies heavily on the debunked hypothesis of efficient markets, and mine.
  • #37
  • Jan 15, 2020 7:28am Jan 15, 2020 7:28am
Quoting LloydOz
{quote} Hi TudorIoan - Thankyou for an introduction to basic theoretical probability theory, one that is applicable to the process of say flipping a fair coin or rolling a dice - "at any moment". This instantaneous process is such that each toss is independent of anything previous - there is no memory or persistence, for example. It is free of temporal effects. I think that everyone would accept that in any series of tosses, heads will appear approximately 50% of the time. This is the law of large numbers that casinos seem to have cottoned onto....
Very interesting, thanks
Yet, I see a contradiction between persistent varying and ephemeral appearance. Or maybe it refers to continuos periodicity, even rare and hard to be perceived.
Even so, I see aliasing only as an effect due to the imperfections in some machine which generates artificially the random events. But I think a "living" thing like the market doesn't show any periodical varying at all. Such a subtle but acknowledged constant in a free market would be equivalent to the holy grail, undoubtedly.

About the martingale "magic", the classical doubling style is totally insane, but I've seen less aggressive trading robots working smoothly for 6 years now, without any black swan event.
Disclaimer: people should mind their business, successful EAs are extremely risky ...on the long run
And I call talent in mastering such a strategy because it involves fine tuning of risk in relation with volume, traget, maximum drawdown, reasonable profit/greed...
Member
  • #38
  • Edited 3:01pm Jan 16, 2020 4:14am | Edited 3:01pm
@dkrock
What does it mean a bar would be the same as the previous one between 84%-86% of the time ?
84%-86% same color, 84%-86% same price move?...
Like the previous day 100 pips bull move, would anticipate the next day with 84%-86% accuracy a bull bar for at least 80 pips ?
Trading it would be trivial and we would be all millionaires !

Oh, excuse me, I see you're a professsional trader
Member
  • #39
  • Jan 16, 2020 4:16am Jan 16, 2020 4:16am
Quoting dkrock
That was nearly 4 years ago and nothing much has changed, other then the number of pairs and number of accounts. Math is math and as you can see, it is not 50-50. While anything can happen at any moment, the vast majority of the time price can be converted from chaos into control. Good Luck.
Just curious why would anyone be engaged in a 50-50 business ?

The market is the same yesterday, today, tomorrow and evermore. Otherwise there won't be the same opportunity to make and lose money.
Know what you trade
  • #40
  • Jan 16, 2020 4:30am Jan 16, 2020 4:30am
Quoting dkrock
{quote} As I said, I do not trade Heiken Ashi, so I cannot answer your questions. I was only quoting analytical evidence as I remembered it. I practice continuous process improvement, so over the years I have learned many things about indicators, charts, and trading systems. In my business plan, I could care less what the next candle will do as I trade sample sizes, not candlesticks. Thanks for asking, but you will have to do your own research. Have a good day.
Words... internet full of words, secret systems, classes, books, experts, professionals, legends, magic holy grails, brothers we can trust, ...but brokers reports 90% losers
I'm not a kid, buddy ! Have a good day you too !
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