When to exit.

Discussion in 'Automated Trading' started by goodfellow, May 19, 2006.

  1. Is there a good charting indicator or study that is accurate on letting us know when to exit a trade(Emini's-ES)? I've been reading candlestick charts and indicators - bollinger bands, MA's, MACD, volume, stoch, CCI. They are pretty good at telling us when to enter a trade(accurate and the ES goes the way the indicator said it would), but I end up giving it all back because I never know when to "exit".

    Anybody have some advice on "exiting" an emini trade(ES)?
    Indicators, studies, software?:confused:
  2. Take 2 pts and call it a day, compound it, and watch it grow.


  3. 10 good methods.
    1) Pivot point, S and R levels and the mid points between PP and S - R levels make good targets.
    2) If it is a reversal trade look at the 34 Ema on the higher time frames - ie the 34 ema on the 13 min. chart if you trading of the 3 minute chart - it often is a strong support and resistance level.
    3) Fibonacci extension of wave 1-2 and/or wave 3-4 peak/troughs. For example - price is 1.2755 and goes to 1.2789, then is retreats to 1.2775 and you get in long. Do a fib extension of 55 to 89 and then a ratio of that (usually 1 or 1.61 ie 1.2821 or 1.2844 respectively) are common targets. Likewise, the last two digits on price such as the round number 00 - 50 and fib numbers 13,21,34,55,89 are common targets where price likes to rest.
    4)Retracement of the previous impulse move. Ie If in the above example price got to 1.2844 - then the .61 retracement of that is = .61 x (1.2755-1.2844)= 1.2789 is a good target if you got in short at 1.2844.
    5) Wait until you get a signal in the opposite direction.
    6) Pick a number and stay with it ie 10 pips, 20 pips 2 points or whatever. If your decided risk/return is 3 to 1 - look where you have placed your stop (ie previous swing high/low) and simply multiply the amount at risk by the risk/return factor.
    7) Short term momentum indicator crossing into the long term indicator and/or momentum indicator is hooking on the same time frame. IE CCI 14 is reading 150 and CCI 6 is reading 200 on one bar and then on the next bar CCI 14 is reading 130 and CCI 6 is now 110. Also, a trend line drawn on the momentum indicator (CCI or RSI) - exit when momentum reading crosses that trendline. Ditto when drawing a trendline on price - exit when price crosses or closes past the trendline.
    8) If swing trading stay with a trade until a good signal emerges on another product. IE You get in Long on EUR and the next day you are in profit and you see an opportunity on the Aussie dollar - keep moving around from market to market when a good opportunity is found, but in the meantime stay with a winner.
    9) Fibonacci time projections. Look at the swing hi/lo and project a fib time study from those. The chart tool will project a ratio of that (1.61 is common) forward into the future as a possible point that price will reverse.
    10) Gut feeling.
  4. PS. I forgot to mention channel walls as well can be good exits. IE Draw a valid Andrews Pitchfork or somesuch channel over price and the walls on the far side of entry are important support and resistance zones that can act as profit taking targets.
  5. Thanks everybody. All are good exit strategies.
  6. Don't mention it. If you would ask me what my favourite method of exit is: fib time - but not how it is commonly used. In the example above - I gave 1.2755 1.2789 and pull back to somewhere between these as your entry long. Project from the bar that is 1.2755 a fib time study and have as the second point your entry bar - it should have the lowest low amongst the surrounding bars and it has retraced aproximately 50-61% of (1.2755-1.2789). If the distance between these bars is say 10 bars wide - then the fib time study will project forward 16 bars - usually a good reversal area - give or take 1 bar. 2 things to keep in mind. Will not work with tick and volume bars - artificial constructs that time fib does not work well with in my experience. Secondly, the second point that you use can change. Price pushes forward say to 1.2800 and then retrats .61 (of 1.2755) for the second time - you have to reset the chart study - as it is setting up a bigger move!. With time and practice you will be able to see the .61 and 1.61 retracements with the naked eye. Finally you can intersect time fib with fib extension chart tool - the intersections of which make important reversal points that are exact on both x and y axis - you will be amazed. Always double check with price bar formation and oscillator studies so that you are not reversing too early/late.
  7. Ahhhh - 1 more exit I forgot - an OLD favourite.
    The Chandelier exit popularised by Chuck Le Beau. To illustrate with an example:
    Suppose you go long at 111.80 (the yen for this example). Suppose their is a breakout. What you do is to set your TP trailing the high (hence the name chandelier - it hangs from the ceiling) - using a multiple of ATR (volatilty based stop). If the breakout bar has a high of 112.32 (on the one hour charts) and ATR (14) is 37 then you move your stop to a multiple of this figure (depending on what you want to achieve - but usually 1.5-3 x ATR).

    To keep it simple let us choose 1 x ATR
    Therefore your exit is :112.32-.37=111.95 (in profit).
    The end of the next bar and the high is 112.80 (low was 112.63 still in trade) - (new ATR=38)= 112.42.
    Next hour (High112.96/lo 112.59) ATR 38 stop is moved to 112.58
    Next hour (High 112.88/lo 112.64) ATR 37 stop is NOT moved to 112.51 but remains at 112.58. Hence the name Chandelier - always remains at the ceiling point.
    Next hour (High 112.88/lo 112.58) Target hit @112.58.
    If you were to go short then you would use the low. You can use any time frame to set the target (one hour is just an example).

    Several implications here.
    You will never get out at the peak price value.
    As it is volatility based in a fast moving market the wider stops allow price more room to move so that it can get to its next price level. In a slow moving market the stops will be tighter as their may be less volatilty to take advantage off. Therefore the stop expands and contracts according to volatility - important in markets that go from trendy to rangebound on a very regular basis.
    You need to experiment with your market to find the optimal ATR multiple. Markets can and do change so this figure may need to be monitored from time to time.
    The higher the ATR multiple you choose the more room you give price to move BUT if their is a savage pullback you will get taken out with less profit than if you chose a lower multiple.

    Also, it takes alot of the guess work out of stops in a very precise way.

    Van Tharpe did a study on this very exit and found even with RANDOM entries on daily charts (3x ATR) that the system was profitable. It keeps you in a strong trend - as they say the trend is your friend.
  8. ===========
    Good fellow, good question;
    Several or more good ways to do it,Good fellow;
    5 minute candles/ 10 ema, plus experience, gets lots of trends.

    Except , try to avoid sideways trends with ema [ex moving averages.] Win some lose some, win some more.

    ES, all eminis move like rabbits, watch fibo numbers like 1313;
    13 ema is fine also, 10 is fine ,also May exit before 10 ma HIT.

    Profit targets work well & even 1 point is better than loss[$50.00];
    like whether its short or long, say long @1277.7 today, as soon as entered/filled limit order, immediately enter Interactive Brokers sell stop target, like 1280.o, more or less , depending.

    Also may reduce my profit target if not hit by lunch;
    flat ES eod.

    I am all for milking a trend , wisdom is profitable to direct;
    :cool: but unless I am very ,very sure of a trend ;
    immedialety enter profit target as written in last paragraph!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!.

    And if it looks like on charts a bunch of turtles /bulls or bears jumped in a trend , may cancel my profit target, get more;
    or may reduce target as eod [end of day ]gets closer.

  9. What are turtles? I know bulls and bears. But turtles?
  10. trail it...

    deviation move against you...
    #10     May 26, 2006