System Entry vs Exits..Same or different

Discussion in 'Strategy Development' started by taowave, Feb 6, 2007.

  1. taowave

    taowave

    Hi all,
    Was just curious to how one trades Entries vs Exits.Do you use the same exact criteria to exit as you did to enter???

    If you get in on a close crossing above the 14 period MA,would that be your primary exit rule,or do you look for a different exit setup??

    Any input appreciated

    Tao
     
  2. Usually exit rules are different from entry rules. Why? Because the condition for entry can be different from that of exit.

    If you are looking at moving average system, because of it being always in the market all positions are reversed. Therefore on exit, new entry is made at the same time. However, there are other moving average system that do not reverse, for example, the three or four moving averages.

    Moving average system, as they are commonly published either in books or on the Internet, do not have any money management rules. Therefore, they do not have an additional and important exit condition that serve to protect capital and/or profit.
     
  3. Simulation software allows me to compare trading results obtained using different entry and exit rules.

    I find some entry and exit rules test more profitably than others.

    Purchase when closing price is greater than the 14 day moving average value and selling when closing price is less than the 14 day moving average value is likely to generate many short term losing trades.

    Attached is the result of trading Tenaris stock symbol TS using $ 10,000 initial capital and position size = $ 600 / ( 10 % of opening price per share). Buy if price is greater than the 10 day exponential moving average value and sell if price is less than 50 day exponential moving average value. Long positions only. Might be a good system. Perhaps I should work on it more.
     
  4. taowave

    taowave

    Thank you,

    I was asking as I typically have seen sytems where the Entry rule is very similar to the Exit rule....I recently purchased a software program that scans over thousands of "trading rules" and comes up with different combinations and permutations for a given portfolio of stocks.

    One has the option of "locking" entry and exit rules,or letting the system sift thru the data and come up with the "optimal" rules for ones preferred risk/reward appetite....

    I was curious as to how other users decide upon Entry vs Exit