rules for 1st few bars after trade is on

Discussion in 'Index Futures' started by PetaDollar, Aug 10, 2003.

  1. PetaDollar

    PetaDollar Moderator

    Regardless of your entry method, after you open a position the next few bars are critical. You can save some bucks by getting out before your stop is hit, if you can recognize that the trade doesn't look like a winner.

    Example: NihabaAshi wrote last week about trading hammers: if the next couple bars have long upper shadows, that's a sign of resistance and a heads up to bail out.

    My question for the group is: what kinds of go/no go criteria do you have for this critical time?

    For one method i'm looking at, it seems like for most of the winners, the next two bars close in the direction of the trade. So when I trade it, if that's not the case, i'll bail.
  2. very interesting topic.

    i think it depends a bit on the timeframe one is trading - but there is the old saying, that the best trades work right away - so i for example trade on the 1 minute chart and it happens sometimes that the trade moves within my stoploss for several minutes and i watch it and find that somehow it simply doesn't look that good. getting out in such a situation BEFORE the stop is hit might hurt if the trade turns around and eventually goes in the right direction (really not the best feeling you get in such a case ...).

    but on the other hand - and to answer your question - i think if your average trade lasts x minutes and you are in a trade that is STILL within your stoprange after x minutes - then this might be an argument for thinking about getting out - at least in my opinion. risk exposure without return.

    but this also depends on the size of your stoploss of course and above all - it has much to do with experience.