where/when to exit?

Discussion in 'Strategy Development' started by c.chugani, Nov 6, 2007.

  1. Hello everyone,

    ive recently been studying a trading strategy using weekly candlestick charts and indicators.

    I get my signal after two particular candles have been formed (my entry is in the next, third candle).

    Since I am dealing with weekly bars, I know [more or less] when to enter the market (ie. at the end of week 2, or at the very start of week 3). But I dont really know how to plan my exit from the market.

    Do I just use trailing stops? What other criteria could I use to define my exit on weekly bars?

    Thanx for helping out.
  2. Hi.

    I use a 2*ATR(10) trailing stop for the exit on my weekly trend following system for equities.

    Further details can be found on my blog.


    Best regards,

  3. Single method which you may trust is testing. Only in this case you get a truthful result. ANd This is i may say about enteries.
  4. Pardon my ignorance but could you please explain what 2*ATR(10) is ??
  5. ATR = average true range.
    It takes into account the volatility of the stock.

    The 10 means that the ATR of the last 10 periods (in our case, weekly) in taken into the calculation.

    2 means that the ATR is trailing the current price.
    So as the price moves up, the ATR stop will quickly move up with it, to lock in increasing levels of profit.

    But as the price falls, the ATR trailing exit will flatline ie. this stop never moves backwards. Take a look at my blog. I have a few examples there of how the stop works for a loser and also a winner.

    Also, as volatility increases, the stop will widen (by definition) to give it more room to move. Consequently, as volatility contracts, the stop will track the price more closely, as ATR is naturally less.

    ATR trailing exits are also known as Chandalier stops. Im sure a google search will be useful if you are after a better/different definition.

    Best regards,

  6. the trailing stop are most simply and robustness exit's.
  7. WHAT? :confused:
  8. DrEvil


    You need 2 exit strategies, one for range bound markets and one for trending/breakout markets. Hand test them yourself.
  9. i mean that trailing stop is most comftable exit. that i told about robustness i mean the stability of system.
    Sorry for my english.
    From Russia with Love.
  10. Stability ? Do you mean the smoothness of the equity curve or what ?
    Backtesting chandlier exits indicates better Win% performance, but much lower $ win per trade.
    I'm not knocking the technique, just indicating there are trade-offs in using it vs. other exits.
    #10     Nov 11, 2007