Statistical information collected about all setups I use and many I don't use (because their stats did not satisfy me). Statistical information also provided evidence for me, that random entries with whatever exit strategy have nowhere near the edge of quality entries made at the levels, where price has higher chance of reversal vs. random, which is confirmed by the fact, that taking those entries even with 1:1 risk:reward exit attributes generates significant profit, not even speaking of letting those trades run longer.
Same experience relates to volatility plays as well as outright directional plays (about which I said in the previous post). There are times, when volatility expansion is far more likely to happen than if buy volatility randomly.
The setups used are based upon what? I appreciate your diligence in having done the statistical analysis, and am enjoying the dialogue!
Well, since exits make up 2 parts of the equation (stop loss and profit taking) and entries make up 1 part, then yes I would say exits are more important.
Would you be willing to share two price action setups or the criteria for them and two fundamental analysis you use? I'm not interested in it from a trading perspective, more from introspection. Thanks
Yesterday is the perfect example of fundamental factor in action. Italy concerns added to the rest of Euro-zone problems favoured shorts big way. Another example of fundamental factor was market rally on surprise ADP data last Thursday. Fundamentals act as filters for entry signals, when they are strong enough. As an example of setup: 5min support/resistance and trendline bounce signal with max stop-loss of 9 pips average for 2011 YTD is ~56% winners of at least 15 pips, ~22% of break-even trades and ~22% of 9 pip losses (rounded to max stop amount for simplicity here, some losses are less in reality). That's the approximate algo for all signals and trades stats.
Many dispute the fact that a exit is more important but it is. If you have a broad understanding of where the market should go the only thing to do is wait for your trigger. BUT is your trigger to small to big or maybe it just doesn't feel right, Who cares! Just get in the market and manage the trade accordingly. As long as you are managing your trade and letting the trend play out in your favor you will win. More often than not traders get kicked out of a trade by ticks before it runs in favor a nice amount of points. Dont let this happen to you! Fighting for ticks never works that well in the broader view. This video is a perfect example. I got short and the market fell, if i didnt exit the trade when I did the trade would have been back in my face. Exits, Exits, Exits!! http://www.youtube.com/watch?v=R1Ntw6oNLNs&feature=feedu
I agree with you 100%. Exits and managing the trade are far more important. By exiting right you are controlling the trade and your money. Support and resistance are the best way to do this in my opinion.