Exiting a trade

[MRC & Co]

Here you go, MRC. You might want to put this on.

ha ha, I am sure he can turn a profit in the markets (afterall it's really not that hard to do), but just how successful is he as a trader, as opposed to a 'guru'?

I like most of his ideas and think his very good to read. But anyone who spends all day watching tape, knows there are plenty of moments your conviction changes to all different degrees and as such, scaling in/out, or whatever can be extremelly useful I think.

Heck, even Soros scales, and not just because he has to for size.

 

[tech/a]

You could sell a percentage of your holdings "when you are well in front" and leave the rest at break even or above.

thanks to tech/a.

This is known as "Free trade"

I was introduced to this method by an old guy at an ATAA meeting.
(About the only person I found interesting). He hand plotted P&F charts.
Was a bit--no a lot eccentric.

"I treat stocks like a stable.If the stock is performing then it stays in the stable---if it isn't then I get rid of it.
Once a buy has added 100% to its buy price I sell 50% of it and leave the rest to trade indefinitely. I have some which I have done this with 3 times.
The only way I can then lose is if it is delisted and even then its only my profit on that share. I have 30 stocks in my stable at most times and been doing this for 20 yrs."

Ive never done it but made a lot of sense.

Now to the question.
The answers show to me that there isn't to much trading planning let alone a proven trading system.
The answer is in there.
Are you trading a long term method? What are its exit rules?
Are you trading a short term method? What are its rules?

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

 

[nunthewiser]

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

I do as pointed out amongst these threads a while back . a "free" carry hold is my bread and butter and sometimes bonza burger.

i have removed original capital and preserved that capital plus also i have built myself a foundation of holding the stock as a longer term hold without caring about minor /abrupt swings and moves

i also use this free hold as a grounding on other trades of same stock with the addeed bonus of holding at a mighty nice avereage and also keeping stock as profits instead of cash and building position BUT still keeping the original capital flowing

now i may not know all the lingo or have all the indicators or pay 20k a year on "learning " but i sure know what works for me

each to there own and if it obviously dont work for you , dont do it

 

[Qed]

hey NTW hows trix

 

[nunthewiser]

hey NTW hows trix

if that the same QED from commsec in the past.......... gday . and good . we in livechat asx hours m8. pop in

 

[Qed]

quod eros demonstrandum ,, its moi will do ,, too much waffle there

 

[tech/a]

I do as pointed out amongst these threads a while back . a "free" carry hold is my bread and butter and sometimes bonza burger.

i have removed original capital and preserved that capital plus also i have built myself a foundation of holding the stock as a longer term hold without caring about minor /abrupt swings and moves

i also use this free hold as a grounding on other trades of same stock with the addeed bonus of holding at a mighty nice avereage and also keeping stock as profits instead of cash and building position BUT still keeping the original capital flowing

now i may not know all the lingo or have all the indicators or pay 20k a year on "learning " but i sure know what works for me

each to there own and if it obviously dont work for you , dont do it

You wouldnt happen to have a trading statement for that statement would you?
The usual $500 I expect you'll have that nun.
Joe would be very appreciative.

 

[nunthewiser]

You wouldnt happen to have a trading statement for that statement would you?
The usual $500 I expect you'll have that nun.
Joe would be very appreciative.

of partial sells and rest riding showing sizes of my trades ? no bugger off my trade sizes and capital none your business actually

couldnt give a hoot if my claims or strategys respected or read actually

i have posted trade entrys/statements etc here in forums already and i will not be part of your egotistical dick holding contest .

if you want a statements showing simil;ar kind of thing as posted in forums already .yeah no worries bud but yes it will cost YOU the 500 just for the inconvenience

( examples of trade statements /orders filled/sold should be in LKO , FMS and maybe BTA etc threads)

no offense intended

my strategy as pointed out in my last post is still valid and if you cannot see that then perhaps you need a course or buy a book where perhaps its written nicer

 

[matty2.0]

You have a specific target BEFORE you enter the trade.
You make money BEFORE you enter the trade.

 

[makingmoney]

Interestingly, I’m just reading “Trade your Way to Financial Freedom” by Van K. Tharp, and he advises against doing this.

Quote:
“There is one kind of exit that is designed to get rid of losses, but it totally goes against the golden rule of trading of cut your losses short and let your profit run. Instead, it produces large losses and small profits. This type of exit is one in which you enter the market with multiple contracts and then scale out with various exits.”

“Short-term traders use this type of strategy frequently. On a gut level, this sort of trading makes sense because you seem to be “insuring” your profits. But if you step back from this sort of exit and really study it, you’ll see how dangerous this type of trading is.”

“What you are actually doing with this sort of exit is practicing reverse position sizing. You are making sure that you will have multiple positions when you take your largest losses. ...... You are also making sure that you only have a minimal-sized position when you make your largest gain. ...... It’s the perfect method for people with a strong bias to be right, but it doesn’t optimize profits or even guarantee profits.”

“If it doesn’t make sense to you why you should avoid this sort of trading, work out the numbers. Imagine that you only take either a full loss or a full profit. Look at your past trades and determine how much of a difference this sort of trading would have made. In almost every instance when I’ve asked clients to do this, they become totally amazed at how much money they would have made holding on to a full position.”

Best thread on asf in which i have read so far

 

[Mr J]

On what basis would they close all of it? Based of the system indicatiing an exit, or exiting based on 'gut feel' that the price is too high?

A cliche answer, but I suppose at whatever point the position is no longer considered profitable.

That may depend on what type of system you are using. If you're using a mean reversion type system, then there could be something in what you say, although I have no experience in that type of trading so can't really comment.

Successful trend-following type traders though, tend to do just the opposite - scale UP, rather than DOWN, so that they get the maximum out of their largest winners.

It might, but I think it's relevant to any system. It's just a strategy used when the probabilities that are in our favour are decreasing.

I assume you mean pyramiding, but that has nothing to do with scaling out. You can do both if you wish. I doubt they maximise winners, as I'm sure they will decrease their positions at points of lower probability.

This is known as "Free trade"

Ive never done it but made a lot of sense.

Depends whether there is reasoning other than to lock in breakeven/profit while trying to also hit a homerun just for the sake of it.

Now to the question.
The answers show to me that there isn't to much trading planning let alone a proven trading system.
The answer is in there.
Are you trading a long term method? What are its exit rules?
Are you trading a short term method? What are its rules?

How do you achieve your positive expectancy?
Clearly no one here is trading a method .

Don't make assumptions tech. I have clear rules, though some people will no doubt consider them cliche. I exit a trade completely when I am no longer confident, and exit partially if confidence is lowered but still think it is +ev.

You have a specific target BEFORE you enter the trade.
You make money BEFORE you enter the trade.

I find this very unreasonable, as I don't presume to know what the market will offer. If anything, all I can do is guess, and be flexible.

 

[MRC & Co]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.

Discretion at it's finest. Lost 5% of his account in one trade, didn't blow up, far from it. No traditional position sizing and systematic process there. Just a good read of the markets and a good read of underlying psychology of the markets (see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.

 

[nunthewiser]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.

Discretion at it's finest. Lost 5% of his account in one trade, didn't blow up, far from it. No traditional position sizing and systematic process there. Just a good read of the markets and a good read of underlying psychology of the markets (see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.

black and white = grey i got taught that at kindy.no cliche's about it

seen many a clich'e bandied around of late and buggared for the life of me if its actually practical to use half of them in real life trading . write it in a book .hell yeah ...sounds great . use it in the market at your own peril .

as far as spoofing the depths hell yeah tis a daily occurrence . lol knew a bloke once actually that does this on a regular basis on a certain stock he regurly pushes around to suit his needs but this is merely heresay and i was drunk and he was drunk chatting about it at some pub i cannot remember now . moral of the story is that the market is a living breathing creature and no amount of theorising about it will make one iota in the actual outcome ... all one can do is attempt to be on the right side of it .

money management and controlling ones gains and losses is a different matter tho and one mans risk may be another mans beer money but still boils down to the same thing ..... one must make more than they lose at the end of the day......

anyways what would i know im just a nun that obviously likes talkin crap about something i never learnt in a book oh and obviously never uses the previous strategys because i refuse to show off my trade sizes / capital bases to some nob off the internet.

each to there own i say and if it works do it ......... if it dont ........move on and find something that does.

 

[Naked shorts]

Nun, black and white, black and white remember.

Watch the Tudor Jones documentary, see how different the ASF cliches are too what happens at top hedge funds and how top traders play.

The doco has been taken down from Youtube, but now there is a torrent floating around...
http://www.elitetrader.com/vb/showthread.php?s=&postid=2519450#post2519450

 

[MRC & Co]

Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.

When really, this is a HUGE element of most traders strategy.

My biggest gripe, is people (tech or Van Tharp, bet he likes being included in that bracket) dismissing a certain strategy or idea without enough knowledge of how these guys do their thing.

 

[nunthewiser]

P.S

i should point out that in NO way am i viewing those that have paid or paying for courses /books/ learning with any scorn WHATSOEVER .. if it works for you .BRILLIANT STUFF

i do however view those that think that THERE way is the only way to do things in the market,i do hold those ideals with contempt and scorn

there is none so blind that cannot see

end of sermon

amen

 

[Cartman]

(see him spoof the ask when he was trying to get filled on the long), yes this happens, despite egos around here I know of laughing at the notion.

anyone who laughs only shows their ignorance Mirc ----

every punter lives within his own comfort zone ---- i have no problem with that cause i do it myself --- but ---

if punters preach "superiority" without foundation or without humility --- that kinda peeves me as well ---not exactly what u r talking about but similar methinks.

 

[Chorlton]

For example, the exit criterea currently sitting in a mechanical system im coding returns 20%+ from 2003 to 2009 p.a, using random entries on random stocks at random times.

Hey Brad,

What code do you use to generate the random Buy Signals? Is it similar to that contained in Howard Bandy's book or something else?

 

[nunthewiser]

Yes, not just spoofing the depth, but people around here have dismissed the notion that traders try read the underlying psychology of the market, be it play by play in the order flow, or on a daily level.

When really, this is a HUGE element of most traders strategy.

.

yep.


my calls here may be viewed as reckless , unknowledgeable , untimely at times ......but hey thats what i got in front of me at the time . its what I see . right or wrong... still MY view ....... i trade them views right or wrong BUT i also have my OWN plan on them ...... and that is ALWAYS right regardless of a loss or a win . ( give or take the odd trading halt and news scenario with major gapping)

im more than happy to enter trades i view as a potential turning point and stop out when proven i was wrong , i dont subscribe to the theory of " dont predict a trend , go with one" .

dont we all predict the trend gunna continue after our entry ?

dont we all predict entry and exit prices ?

so why cant ppl predict there perceived turning points and stop out if wrong ?

rant now continues...............


how about this 2% rule that gets bashed around here so often ...............

then on the next page we hearing that you must be diversified in your holdings !

what happens if they have a small capital base ? are they still expected to stick to "the stocktrading rulebook " and buy a parcel they need a MAJOR move just to cover brokerage ?


what happens if one has a larger capital base and is invested in a nice yield paying investment and does not trade the market moves ? happy to sit there on 0 , miniscule or sometimes even negative growth but the stock is still returning the same yield year after year ...... are they wrong also because they care not about the highs and lows?.......

so many varying opinions and strategys and situations ......... use the force and find the one that fits .

this post is no way intended to disrespect any of the many book writers , course offerers , trading teachers in these threads as you found your own niche and now making a buck teaching others BUT what you teach does not provide the golden goose to the person whose style and attitude/psycology differs greatly to yourselfs

the market is not a robotic enviroment it will do as it wills guidelines and theory only goes so far.

 

[Aussiest]

still MY view

.......


how about this 2% rule that gets bashed around here so often ...............

In relation to first point, that is true. Because then you can take responsibility for your losses and gains, and that's what it's all about sometimes.

In relation to second point, i don't agree with the 2% rule. I think 0.5-1% is far more sensible. What happens if you keep getting stopped out of a trade and you enter again and again? By the time it actually works for you, you're probably down 2% pr even more, therefore you have to make up the 2% regardless of what happens. What if the position never appreciates 2% and you make an overall loss? Perhaps tighter stops are the answer???