Hey, We talk a lot about entering trades, but I think exiting trades are probably just as important. I was wondering how people exit trades on winners. Does it usually hit a stop you moved up? Is there an indicator that works especially well? Do you use one time frame get in and one to get out? Would like to hear anyone views and experiences. Thanks, Roy
I tend to exit on relatively high volume, large range periods in the direction of the momentum. Except in cases where you have a lot of stop activity (and those are usually easy enough to spot), relatively high volume can mean that buyers and sellers are reaching a balance, bringing supply/demand into equilibrium, and soaking up momentum as a result. On the other side, relatively low volume in the direction of the momentum says that buyers or sellers are stepping out of the way (i.e., sellers in the case of bullish momentum, buyers with bearish momentum). Thus, momentum is more likely to continue while supply and demand are not in balance.
If I'm in a winning trade, I usually exit half at a predefined target and let the other half run. All depends on the situation of course. If a market starts looking crappy before first target, I dump the whole thing. As for losses, I always have a stop in immediately upon my fill, but often don't let it go that far when it looks like shit right from the get go. This almost always saves me money as few of these crap trades would have worked out. Thats my very subjective simple approach.