My Exits are Wrong

[Bin57again]

Hi all
Happy New Year.
I have what I think could be a reliable system but my exits are all wrong.
I enter the position, it moves in my favour - this happens probably 60-70% of the time.
If it moves against me, I'm normally stopped out early(ish) - that is, I give it a bit of room but I don't hold on to a losing position. This bit I'm proud of.
However, where I fall down is that I get into a nice bit of positive territory (e.g. 10-15 points in my favour) but then the next swing takes back almost all/a big chunk of that position.
The session nears the close, the spread widens (e.g. from 1 or 2 points to 4 or 5), and hey ho I've grabbed a losing position from the jaws of success.
I think about smaller profit targets (e.g. 10 points) but since my stops are normally 10-15 points, that makes my R less than 1.
Today is a good example. I was trading the SPI. I entered short (4726) seeking a retest of the recent lows. My target was 4696, my stop was 4741 just above the pivot point. So, my target was about 2:1.
I got on a good move down to 4701 so I was +25. I didn't make the target. Now the swing has taken us back up to 4715. The spread has widened to 5. I'm just about breaking even.
This happens a lot to me. What is translates to (in my recent trading diary) is a bunch of winning trades (around +3 points) and a few losing trades (around -12 points).
Like I said above, I often think about taking 10 point profits but that then leads me to reduce my stops to e.g. 4 or 5 points. That then translates to high numbers of consecutive losers due to noise.
I can see my logic is good, my exits are lousy.
Please could anyone offer some guidance?
Thanks for your time.

 

[TulipFX]

Try setting your stops the 'other' side of support, and your profits 'this' side of resistance.

On the trade you described above the previous low was 4696. There was also a whole number at 4700. I would have looked to place my profit at just above 4700 expecting both whole number resistance and previous low resistance at about the same spot.

 

[Market Depth]

Hi Bin,

Does this happen when you are 'Going Long'? I feel that your 'Entry' to the shorts could be giving you trouble, not so much the exit. or you could be simply fighting the trend? If your getting stopped out on your shorts then your waiting too long to sell the short. If it were me, I just get back to basics, work out what you were doing right when trades were in profit. Paper trade for a few weeks, and keep track of the spreads. Work out at what point the spreads are which become a precursor to price movement, both up and down. Doing this should give you clues as to when to enter Long or short.

Hope this helps

 

[nomore4s]

IMO you need to look at your R/R of closed trades. No point having a 2:1 ratio before the trade is taken but ending up with a 1:2 ratio after the trade is closed after a number of trades. Your ratio before the trade is really nothing more then a guess and should not be used as a guide accessing your results.

If your are trading the SPI and having these problems you need to employ a trailing stop and maybe also a time stop if trading intra-day - i.e closing positions out at a certain time before the spreads widen (or start trading the real futures market).

 

[Bin57again]

Thanks Tulip

Try setting your stops the 'other' side of support, and your profits 'this' side of resistance.

On the trade you described above the previous low was 4696. There was also a whole number at 4700. I would have looked to place my profit at just above 4700 expecting both whole number resistance and previous low resistance at about the same spot.

Point 1 - Not quite sure what you mean here? I like the sound of it but could you spell it out please? I'm guessing you don't mean stops 2x profit target.

Point 2 - The low was around 4680 but I was aiming for 4696 which was S2. You're right - in hindsight, S2 plus 4700 does look a damn good support point doesn't it? The problem is that the trend was down and what often happens (in my experience) is the longs waiting at support get burned first i.e. the market pushes down to say 4685-90 before reversing. Also, in my experience, round numbers are 50/50. Looking left, you often see price reverse in the 90s or the 00s and occasionally very close - but just as often, there's no correlation. Recently, the SPI did reverse at 4810 but 4600 and 4700 in December showed no correlation.

 

[Bin57again]

Hi Bin,

Does this happen when you are 'Going Long'? I feel that your 'Entry' to the shorts could be giving you trouble, not so much the exit. or you could be simply fighting the trend? If your getting stopped out on your shorts then your waiting too long to sell the short. If it were me, I just get back to basics, work out what you were doing right when trades were in profit. Paper trade for a few weeks, and keep track of the spreads. Work out at what point the spreads are which become a precursor to price movement, both up and down. Doing this should give you clues as to when to enter Long or short.

Hope this helps

Thanks Market Depth.
Yep, same thing happens going long. I'm always trading with the trend.
Don't think I'm waiting too long. I have to wait a little to avoid non-movement/stagnant 4/5point moves which just soak up time and spread costs.
When trades are in profit, maybe I'm being too greedy. I know the SPI swings more than say Forex pairs. Funny thing is, when I try and trade swings (i.e. counter-trend) the trend burns me.
Cheers

 

[Bin57again]

IMO you need to look at your R/R of closed trades. No point having a 2:1 ratio before the trade is taken but ending up with a 1:2 ratio after the trade is closed after a number of trades. Your ratio before the trade is really nothing more then a guess and should not be used as a guide accessing your results.

If your are trading the SPI and having these problems you need to employ a trailing stop and maybe also a time stop if trading intra-day - i.e closing positions out at a certain time before the spreads widen (or start trading the real futures market).

Thanks mate.
Agree with point 2. Will work on that.
Point 1 - will think about that. I've assumed everyone bases R on predicted/target price i.e. you see a low risk set up, calculate your stop and then set your target.

 

[nomore4s]

Thanks mate.
Agree with point 2. Will work on that.
Point 1 - will think about that. I've assumed everyone bases R on predicted/target price i.e. you see a low risk set up, calculate your stop and then set your target.

Using R/R to justify taking the trade like you are doing is fine but you need to review your R/R of closed trades and if it isn't matching up to a 2:1 R/R or better it means you have to change either the way you manage the trade while open, the way you enter or exit trades or the way you calculate your initial R/R or all of the above. No point having that R/R if you are rarely getting it, also you can cut your risk down once a trade moves in your favour which will obviously effect your closed R/R. I vary rarely take a full R loss when trading futures.

But to me it sounds like you are getting enough open profit but giving too much of it back so I would look at a trailing stop of some kind. The SPI also needs to be traded slightly differently to stocks especially if trading intra-day.

 

[TulipFX]

Thanks Tulip

Point 1 - Not quite sure what you mean here? I like the sound of it but could you spell it out please? I'm guessing you don't mean stops 2x profit target.

My pleasure.

No, the SL and TP become more dynamic when you are looking for support and resistance. I just drew up a quick example of what I mean. Rather then the trade, more the point is the areas of support and resistance and to use them to protect your positions and profits the best you can.



This would be a 3-5 hour trade. Object is to enter just under a support you think will hold and exit at the bottom of a resistance you think might hold. Or at least get ready if it does hold.

Remember when using this method to correctly calculate your position size to risk.

That graph is the AUDUSD. I purely trade currencies. Support and Resistance are very important in foreign exchange.

 

[Market Depth]

Nice Chart Tulip

Hehe! I would have been into a short at that stop loss level As soon as I could see the , the peaks getting weaker, with each try to push through. Stop just above the peaks.

 

[skc]

A nice thought is that when you progress to 2 SPI contracts you can take profit on one and trail the other. So much more flexiblility when you have multiple contracts.

If you are trading CFDs you might be able to do that with providers who offer smaller lots.

DYOR on CFDs etc etc.

 

[tech/a]

Bin

Help me out here.
I cant find any trading at 4726
But I can find trading below your profit target of 4696 ??

Click to expand

 

[simoncar]

Bin, A great piece of advice I once received.......trade successfully on Weekly and Daily Timeframe for 6 months. Once you have achieved that, then you can lower your sights to intraday. Helped me immensly. Support/Resistance and pivot points are much more reliable due to the large amount of activity that each Daily or Weekly bar contains.

Simon

 

[Bin57again]

Well, I just hit my target of 4796 a few moments ago.
Guess it pays to follow your plan.
I'll be honest though - this system has (despite wins like the above) very low expectancy at the moment. I'm convinced I'm not far off though.
Tech, I trade with IG Markets. Guess their prices are slightly different to the underlying market?
Bin

 

[Bin57again]

Object is to enter just under a support you think will hold and exit at the bottom of a resistance you think might hold. Or at least get ready if it does hold.

Tulip, thanks, I get it. I see how it would work.
Just basic S/R isn't it - so easy...now, if I could just stop being a loser...!
Cheers, Bin.

 

[TulipFX]

Nice Chart Tulip

Hehe! I would have been into a short at that stop loss level As soon as I could see the , the peaks getting weaker, with each try to push through. Stop just above the peaks.

Yes, hard to say looking back exactly what I would have done. I don't trade manually too often, and most of my time is taken up designing, programming and testing automated systems.

More the purpose of the graph was to show that if you can see good support and resistance lines to trade them, or at least take them into consideration when looking to set your SL/TP levels.

They are quite easy for a human to see, but a real buggar to try and code a program to recognise them.

 

[Market Depth]

Yes, hard to say looking back exactly what I would have done. I don't trade manually too often, and most of my time is taken up designing, programming and testing automated systems.

More the purpose of the graph was to show that if you can see good support and resistance lines to trade them, or at least take them into consideration when looking to set your SL/TP levels.

They are quite easy for a human to see, but a real buggar to try and code a program to recognise them.

I know where your coming from Tulip. Most people can't sit and watch all day. It's always safer to wait til it breaks. Problem is then everyone sees it, and the 'Bargin Hunters' come out to play. I wouldn't know where to begin on how to write an automated program for that type of senario. You have my complete admiration.

 

[nomore4s]

Nice Chart Tulip

Hehe! I would have been into a short at that stop loss level As soon as I could see the , the peaks getting weaker, with each try to push through. Stop just above the peaks.

lol, That's also where I would have been looking to go short on something like the SPI trading intra-day but would trade it differently if it was a stock being traded off daily bars.

 

[TulipFX]

I know where your coming from Tulip. Most people can't sit and watch all day. It's always safer to wait til it breaks. Problem is then everyone sees it, and the 'Bargin Hunters' come out to play. I wouldn't know where to begin on how to write an automated program for that type of senario. You have my complete admiration.

Usually if I am going to manually trade, it is breakouts. I have a script/program which you can draw lines then put instructions on those lines.

It price hits this line, open limit order/market order. If price hits this line, close position at loss. Here set TP=0. Here TP.

Lets me set my trades 'manually' but I don't have to be infront of the screen to actually take them.

I will often use it for London close retraces.

 

[Junior]

Hi all
my exits are wrong.

You should include more fibre in your diet.


....sorry