Exit Strategies
Hi guys,
didnt find anything on here, so i dont think this has been done yet. Just thought it would be interesting to see what peoples exit strategies are.
I thought this might help alot of people out, as i remember i had real trouble with it. I spent years learning how to pick where a stock would go, when to enter it, and how to enter, basically everything i needed to know about how to get in to a profitable trade, along with many pie in the sky ideas about where it should go, but nobody ever told me how to get out! and in my opinion that is one of the most important parts.
To get the ball rolling i though id share one of mine. This is a conservative approach i take to exit any triangle formation i trade. Im basing this on a positive expectancy, im not talking about stop losses.
Obiovusly to understand an exit entry must also be known,
I wont give away my whole entry criteria, but i buy off support in triangles.
EXIT 1:
Assuming the stock rallies past horizontal/diagonal resistance, Half the position will be closed once the stock moves lower then the second last up days open.
Scenario 1: Stock continues to move down below old resistance, remainder of position closed.
Scenario 2: Stock finds support at at previous resistance, in more time, and at a lower ranged days, Process repeated. This time the whole position is closed.
This is a conservative exit. There are other higher risk strategies that i also use. The thing i like about this strategy though, is that i have no preconcevied notion as to what the price of the equity will go to. I find if you think xyz should go from 3.50 to 4.50 you will never be prepared to sell it at 4.00! by not putting values on my expectations i found it easier mentally to take the profit.
Of course i based this strategy on backtesting and looking at 100's of flag formations, and shaped it to suit the way i traded and what gave the best possible result for the highest probabilty of return. I am well aware that there may be better ones though.