Determining when it is best to exit and re-enter ?

I was curious if anyone could enlighten me as to how people calculate when it is more efficient to exit a position once it has turned against you and re-enter at the new lower price ?

I see a lot of people using stops at various levels, but there has to be some mathematical way to determine that at a certain point once your losses on accumulated profit have exceeded a certain point it makes more mathematical sense to exit and reenter.

And I know that if you are in a position and up 30% setting your stop at just above break even doesn't make sense. I would think to a certain extent slippage, commission and opportunity costs (i.e. you exit at $100 only to end up having to reenter at $100) would play into determining this.


Any enlightening ideas from some of the wise birds on here ?

 

If your up on a position 30% i would definitely take off some profits and set my stop loss in the money or trail the stop.

As far as when to get back in. Questions you should ask yourself.

What is the overall market doing?

How is the sector performing?

If there is a pullback what is the reason for the pullback?

I personally wait for some conformation to get back in a trade. I let the stock or currency pair consolidate and i look for some of my own
technical analysis to get back in.

Re entering a pull back with the trend can be one of the best trades out there. Timing though is everything.

 

I was more or less looking for an answer that was mathematically back derived.

 

Yeah i'm sorry!

Fibonacci Retracement is the only mathematical way i know of reentering on a pullback.

 

1) You're attempting to over-optimize your method. Don't waste your time doing that. Your method should be defined well enough so that you are confident in taking each and every entry and exit.
2) You will have on occasion have great trades and lousy trades executed at extreme ticks in the market.

 

You know we as humans are always second guessing ourselves. Really the only way I have been able to operate my strategy is to let a computer (robot) execute my trades. No emotion then.

BTW you do know that when you have limit and stop orders unless you are running a system seperate from your broker, they are in public view and computers are picking you off.