This is developing into a wonderful thread thanks to some excellent contributions from Mark and Jack.
Hello: Just wanted to offer my own method for taking profit. I look to pivots and previous price day's price consolidations as points where I plan to take profits. To illustrate this I have a chart of today's action using 5 min bars. I have put in a hypothetical trade, and I show the profit targets I would use. As you can see I like to use pivots. In this instance I would have put on at least three contracts. The last profit objective is found when you scan to the left and see price hitting resistance. Organizing your trades this way, you have to remember that in order to make that money you have to leave a piece in long enough for price to test these points. To the extent that you are able (your account will support the risk) this way of looking at the problem also gives you a bit of leeway in terms of the size of stop loss. I look forward to hearing any comments on this Steve
Hi Steve, that's a pinpointedly professional demo , as usual. Pending arrival of the 2nd profit target, would you have kept the last 'piece' in play right down to your original stoploss level of around 732 ? Or do you ensure that each piece of your trade makes atleast break-even ? Thanks
Here's the chart. Smile up = current body > those of last 3 + is rising! Smile down = current body > those of last 3 + is falling! How can I determine entry/exit plan based on this?
The reason I like to trade ES is that you can forget about letting your winners run. Everybody preaches about letting your winners run and if you can figure out how to do it I guess you can trade anything but I found it extremely difficult to do, consistently. There is another way to trade which is going for small gains with large size. The beauty of ES is that there is almost no limit how many contracts you can trade so if you can figure out some way to consistently find situations where you can extract a couple of points on a regular basis you can simply, gradually increase your size by compounding and in a relatively short time you can fullfill your financial desires being in the market only a few minutes a day, reducing your risk to a minimum.
Hi WmWaster, Your original question didn't deal with any entry method questions and I had replied about exit methods because you said you were having some problems about closing positions too early. As for your chart attachment... You have identified accurately the WRBs on a chart that has no entry signal discussion. (Your WRB levels could be different depending upon where your entry signal was at on that chart) Thus, although I don't know what is your entry method...I'm going to assume the reason why you used that particular chart is that somewhere on it you had an entry signal that's not annotated. With that said...lets pretend you got an entry signal for whatever reasons to go Long where you annotated as the 1st Up Smile character. That 2nd Up Smile character is your WRB pt1 (profit target 1). http://www.elitetrader.com/vb/attachment.php?s=&postid=1006980 If you haven't already researched here at ET...I have a thread called Trading Hammers (revisited) where I talk about a few entry signals along with WRB Analysis as profit targets. http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880 If your not interested in candlestick analysis...just ignore the Japanese Candlestick stuff in the thread and concentrate on the profit target discussions. After you read that thread and seen some of the charts... You'll realize I mainly (not always) scale out of my positions. In fact, after pt1 has been reached... I usually increase my chart interval to look for a pt2, pt3, pt4 or higher WRB levels. For example, lets pretend you don't use Japanese Candlesticks and your entry signals is based upon Pivot Point Analysis. You went Long at that 1st Up Smile character on the 5min chart. Your pt1 should also be via the 5min chart whereas your pt2 should be via a higher chart interval that's one of your favorite. In my particular situtation, I also use the 10min, 15min, 30min and 60min charts. Most likely my pt2 would be via the 10min or 15min chart and I would scale out my positions from pt2 and higher via that same 10min or 15min interval. Now...if you think you caught a trend for whatever reasons and you have some experience with WRB Analsysis and position size managment. You'll know when to ignore pt2 as your next exit of part of your position and instead exit part of your position at pt3 and then ignore pt4 and exit the next part of your position at pt5 and so on. That stuff I can't explain and must be learned on your on because there's too many variables involved that's also related to whatever entry method your using. Yet, to give one variable example... Lets pretend your trade is a counter-trend trade...you could dump a large portion of your position at pt1 and exit the small portions (remainders) at a pt2 or pt3 because the odds aren't good your going to reach those higher WRB levels because your counter-trend trading. Yet, if your entry method was with the trend...you would scale out a small portion of your position at pt1 and dump the larger portion of your position at those higher WRB levels. Another variable example could be related to if you use pivot points or whatever...as soon as a WRB forms in the area of that pivot point... It's a pt level. I think you should begin to understand now how to integrate WRB profit targets after pt1 into whatever method your using and whatever variables are important to you will have impact on where you decide to exit at those higher level WRBs. Once again...I don't know what your entry method is nor do I know what type of variables about the market are important to you. Therefore, how to manage WRBs after a WRB pt1 level on your chart is almost impossible to talk about especially since I don't even know what trading instrument it is. Here are some key variables that have impact on my WRB levels after pt1: * Key Economic Reports price reaction * Intraday Price Action Tendencies (day trades) * Market Seasonal Price Action Tendencies (position or swing trades) * Entry Method * Favorite chart intervals * Trend Analysis (counter trend trading or trading with the trend) Now...in all fairness...all the above requires a lot of market experience. Thus, in the beginning for any trader new to using WRB profit targets... Keep it simple. Thus, know your strategy and any statistical information you have that tells you what are the odds for it to reach a pt1, pt2, pt3 and so on... Manage your WRB profit targets via statistical facts about your method. Then as you gain more market experience along with more experience with WRB Analysis... Those other variables that I mentioned above as key to my own trading will begin to take shape and have impact on when to scale out, position size management, trailing stop management or to dump it all at once at a particular profit target level. Last of all, WRB Analysis doesn't just involve the formation of the body upon completion of the interval. It also involves its formation during the price action of the interval before that interval completes itself. The Trading Hammer (revisited) thread goes into in-depth details about such and its critical to understand such when getting involved in WRB Analysis for Profit Targets. http://www.elitetrader.com/vb/showthread.php?s=&threadid=52880 Mark (a.k.a. NihabaAshi) Japanese Candlestick term
"Candlesticks translates into the Japanese term Nihaba Ashi which means Foot Prints or Foot Steps. The Japanese believe the candlesticks follow the markets price activity and will typically generate patterns at each turning point of the market. Investors use these pattern to assist in identifying the turning points of the markets and to attempt to effectively trade these market trends."