Thursday, 19 January 2012

EXITs Stage Left

I've had a few emails about EXITS. We've spoken about exits a lot. If you put EXITS into the Google search box on the lower right column of this blog you'll get a list and links to the posts.

Where to EXIT is dependent on your style. I trade in the direction of the trend. Whether I'm All Out or Scale Out, I like to take profits as I go, buying pullbacks and exiting at the peaks of thrusts. Others may want to hold onto the position until they identify that the trend is over or until a specific optimised target is reached.

There is no right answer. You can use a trailing stop of some kind too. It depends on style. It depends on back testing. You can use an indicator that hooks back such as a CCI. There are a myriad of EXITS. Its a matter of marrying your style, your perception of risk and your trade management plan. Back testing will show you what meets your profitability and emotional requirements.

The 3 point Renko DAX chart below uses a secondary invisible data feed to help manage trades. You can see the entries and exits. These are the result of Walk Forward Optimisation analysis. This is hugely useful for both discretionary and auto trading alike.

1 comment:

  1. Hi EL,

    In your previous post you said: "My discretionary trading is moving more towards Renkos to get rid of yet more noise. Stops need to be closer than intra bar with these types of charts."

    Could you further explain what you mean by
    "Stops need to be closer than intra bar with these types of charts."