Trend trading, managing exits (share starts to range after entry...)

as a new trader , just wondering what approach people use. say you get into a trend that's going up nicely, and you enter on a new high BO with initial stop loss outside the swing low. a common setup... what if the share starts to range and does a few 'waves' horizontally. should you either:
-leave it alone, as the stop loss hasn't been hit and it may turn upward soon or
-since the share isn't trending upward anymore, exit if price is close enough to BE, or a loss of say 1/2 R will occur.
-leave it alone until a certain time expires or until the stop loss is hit


my question feels like a dummy question, but i'm just curious to know what are people's approach here.

thanks


(context: daily timeframe , trend trading)

Re: trend trading , managing exits (share starts to range after entry...)

grah33 said:

as a new trader , just wondering what approach people use. say you get into a trend that's going up nicely, and you enter on a new high BO with initial stop loss outside the swing low. a common setup... what if the share starts to range and does a few 'waves' horizontally. should you either:
-leave it alone, as the stop loss hasn't been hit and it may turn upward soon or
-since the share isn't trending upward anymore, exit if price is close enough to BE, or a loss of say 1/2 R will occur.
-leave it alone until a certain time expires or until the stop loss is hit


my question feels like a dummy question, but i'm just curious to know what are people's approach here.

thanks


(context: daily timeframe , trend trading)

Click to expand...

Geez... I could give you a long reply! But to keep it really short... there is a great video on YouTube called

"How and When to Exit a Trade: Take Profit and Stop Loss Levels".

A pommy broker just sits there, and drolly explains how he manages stops for his trades. At times you think he is going to fall asleep. But it is a good vid to get an idea of what a seasoned professional trader thinks of setting his stops and how he handles it. The thing that I really like about it is that he is so calm about it. He could be talking about pouring some tea for you. That is the bit that you should take note of...

If you are 'ahead' of your initial trade plus brokerage, and you exit the trade as it is going sideways (which is known as a 'stale exit') then you are ahead. As you have not made a loss. And you should learn to class that as a 'successful' trade. Celebrate anything that is not losing you money, no matter how small.

As Woody Guthrie said "Take it easy, but take it all the same"

If you are trading a break out, expecting momentum, after the break out there is obviously no momentum as it consolidates - should you still be in it?

I agree with minwa. Create trade management rules that will create your edge.

Your diagram shows that you "bought" the third BO. I prefer to buy the first or second BO setup.
Your situation can happen after any BO, but the best RRs are created using the first/second BOs.

You're right , i shouldn't be in it. makes good sense . but when is it best to exit during this consolidating price action? if price action was currently close to the initial stop level after some ranging time, i might leave it alone - it's ranging and it might go higher and approach BE, and i might be able to exit at a not so bad price. would you perhaps wait and see if you can exit when price action is close to BE, or be more conservative and exit at 1/2R loss (just in case it never gets to BE)? i'm thinking I might see if i could exit at e.g. 1/4R loss as that would be a very small loss.

(2nd or third BOs... i'll keep that in mind. my scan code produces 12 month highs from memory but maybe i should be on the look out for little trend-startups as well )
(and congrats Min on mastering trading. no doubt you've gone through a lot of work/effort to master various instruments. i've spent tonnes of hours already and i'm seeing charts and moving averages in ways i never did b4, but yet to make a profit (market has been down on the weekly trend, so that's main reason why. knowing futures/currency must be really useful - just cross over to another market)).

peter2 said:

I agree with minwa. Create trade management rules that will create your edge.

Your diagram shows that you "bought" the third BO. I prefer to buy the first or second BO setup.
Your situation can happen after any BO, but the best RRs are created using the first/second BOs.

Click to expand...

Dusty thread!
Agree with P2, nearly every time I go for the third BO (triple dip-greedy), I lose, usually.
If not, profits have been small.
First BO (initial dip) is usually the most profitable for myself, I will trade the 2nd (double dip), but lower the return expectations.
2nd BO for me usually only nets around 0.25 of the profit of the first, if the trade goes right, that is.

If consolidation or stalling starts after any BO, I'm out as quick as a jack rabbit, because, and as @Skate says, 'selling is a decision that is easily reversed and cheap', or words to that effect, chunked into bite sized paragraphs of course! Thanks Skate.

F.Rock