When to exit?
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- This topic has 17 replies, 6 voices, and was last updated 7 years, 9 months ago by Lewis Nicolson.
July 27, 2015 at 3:37 pm #1508
I think this would be a good little topic, anytime you are unsure when to exit, grab a screen shot of it?
This is definitely something I am having trouble with, I’m still not sure if i should close a trade if i didnt get filled etc? or just hold my ground and trust my exit position?
Here is what I am in at the moment and its hard not to feel emotional pain at this situation. I know overtime I will get better at this but can I get some tips please?
Also, I would like to admit that i pulled my take profit line down because of fear. it was to start with sitting right on 1.55872 but when the market hit and didnt take my profits i panicked a little. which is probably the worst thing you can do.
LewisJuly 27, 2015 at 3:38 pm #1510
Just as I finished typing this the market moved and i got filled, but still, I would like a better insight into when you think its best to pull a trade out due to market signals etc? or am I just over thinking this?July 28, 2015 at 4:07 pm #1513
Exit decisions are certainly something that can get you tangled up in knots when you start over analysing :). But remember, no one knows for sure what’s going to happen next – and you don’t need to know in order to make money across a series of trades!
I’d try to trust your original target as much as possible and trail in the stop loss.
One thing you can do is scatter multiple exit points around your target price which can help reduce the emotional pain of a missed fill on the entire position. So if you were trading at 50p per pip you might have your exit orders positioned in such a way they scale you out in 10p lots. You might have them spaced 0.3 pips apart just under/around your ideal exit price.
It can be easier to handle emotionally if you go out on the trailing stop for the last 2/5 of the trade when you’ve already taken profits at the target area on the other 3/5 🙂July 28, 2015 at 5:00 pm #1517
Would you be able to put up a couple of screen shots on how to do that? I’m guessing what you mean is that if i open a trade, i can split that trade into different parts where it takes a portion of the profit?July 29, 2015 at 10:16 am #1519Keith BowtellParticipant
I have been following many of your posts, they do tackle many of the questions I believe many of us have
At the moment I have issues getting into trades, as soon as I identify a market and possible opportunities I wait for the trigger.
As soon as a trigger appears, usually an engulfing candle i open a trade, however this is the first stumbling block, by the time I enter the trade at 1 pip below/above the previous engulfing candle the price has moved, usually considerably.
I then look for a new entry price taking into account the particular spread for that currency, this ranges between 15 pips and 500 pips. How do you factor this in to your entry price?
What I’m saying is that by the time I identify a good trade opportunity and enter the trade most of the gain has already been taken up, this means that my entry price usually lands on a support position.
With regards to taking profit I am sticking to a 10~1 strategy, if I place 10p per pip the happy to take a £1, £1 per pip then take £10. Hopefully this will limit losses and build up bank balance as well as taking away the “How to Exit” issue. I’m sure as time goes by I will start to look at all exit strategies in more detail.
Don’t stress over the way the market moves, after all it is the randomness that gives opportunities, turns losers into winners and winners into losers. I relate tis to playing poker, you can do nothing about the cards that are dealt, many times you are winning on the flop but loosing on the river, the cards dealt are always random, all you can do is limit loses and maximise winnings.
I have also noticed that on you example you are trading against the MOR – DOR bias, any particular reason for this?
KeithJuly 29, 2015 at 12:41 pm #1520
yip, I have an easy solution for you, before the engulfing candle has printed, you should already have your stop loss and target typed into your order. then when or if the engulfing candle happens, simply use market execution to enter the trade. Remember we are not looking for perfect entries, we are just using the engulfing candle as our signal. The only time I will mark up a 1 pip is if the market is moving slowly, but i rarely ever do that.
Thats a great idea on the exit strategy, am definetly going to have a look into this! Cheers!
Yip, I’m not too scared to trade against the MOR, I prefer to trade with it, but its not a reason to take me out of an opportunity. The reason I traded this was because it had support on my trendline, this meant the chances of it going past were very slim. The market also started to coil up and create a pennant pattern (http://www.investopedia.com/university/charts/charts6.asp). So when the market broke this pennant pattern thus creating an englufing candle, it gave me reason to believe the market was going to go bullish. Hope that helps.
And thanks again about the exit tips, defos going to look into that! 🙂
Also, another little tip is that I set alot of alerts on my screen, so say the market trades below the DOR when I am wanting to trade above, I can set an alert lying on the top of the DOR this means I dont need to stare at that currency pair all day, I also set alarms just below support or resistance if I’m wanting to wait until the market pushes past this etc
LewisJuly 30, 2015 at 4:52 pm #1522Simon DydeParticipant
Hi all, just to throw my tuppence worth in on this excellent thread…
I’ve been trading live for a month now, trying to stick as rigidly to the FXBA way as possible.
I’m concentrating on trying to get good at picking exit targets (more than entry signals) so I was very interested to hear your thoughts, Lewis.
This is my main learning point from my first 12 live trades (where I am just under break even). Going over my screenshots at the end of the month, by far the biggest factor in losing trades was grabbing at what looked like good entry signals (stonking engulfers!) without having thought enough about my exit. I had an exit on paper, but when I was in the trade it looked a lot less convincing than before!!
Funnily enough I found the really strong engulfers out of the DOR came in some of the most cramped situations, so double whammy, (big candle, smaller position size, smaller potential pips). There’s a lesson there I’m still trying to figure out.
So I knocked that on the head and started working back from where I thought the market my start “fighting back” as Lewis says. I like thinking this way round because the targets aren’t changing rapidly and I’ve got plenty of time to make my mind up and I’m trying to think more about the big picture than entry signals and what my afternoon might be like after a hastily pulled trigger in the morning!
So that’s where I’m at the moment. Just a bit of background about what works for me so far, in case anyone is interested. I only trade FXBA 2 or max 3 times a week. I do my analysis (just what Rich teaches) early in the morning and get alerts on my phone for the bid above/below DOR etc and take it from there. Then I shut down the PC and do other things. If no alerts, then no trades. If I’ve got a trade running I put another alert in for break even, if it doesn’t come, c’est la vie, if it does I start the computer again to see if I can trail the stop and decide where to put the next alert to lock in some profit etc. repeat until a stop is hit. That way I only go to my computer to actually do something. I find it works much better for me that way, I’m not second guessing my own decisions etc. I’ve also got the platform on my iPad and phone which works fine for managing out and about but that’s about all. As for waiting for an order to be filled, I give it 90 minutes. There’s no scientific reason, but I think if you’re working the M15 chart, 90 mins is plenty. Lunchtime if using the 1HR.
Its just the way I’ve found works for me so far (early days still).
SimonJuly 30, 2015 at 6:23 pm #1523
Great to see your valuable personal tips being shared in this thread 🙂
Lewis, here’s an example of the kind of thing you can do to scale out of your trades. It can help you overcome those “if only I’d put my exit order three tenths of a pip lower” thoughts, at least partially!
So if you’d entered a long trade in JPYUSD at 50p per pip with 125.500 as your hard target, here’s how you might scale-out with sell limit orders as the market approaches that area (see screenshot). You’d end up slightly worse off (around 4/10ths of a pip) on the overall position by the time all exit orders were filled than if you placed the entire 50p exit at 124.500 but that might be a price worth paying for flexibility and added peace of mind.
N.B you’d need to manually manage your stop losses too. You wouldn’t want to risk having the full 50p stop loss in the market by the time you’d partially exited the position. Better to cancel and resubmit your stops to match the current position size.July 30, 2015 at 6:36 pm #1525
I agree with you on pretty much everything you have said.
I actually tend to stay away from larger engulfing candles, I often like to believe (dont know why i think this), that its just some big rich guy piling a million pounds into the market cause he has nothing else to do, just to watch the market move. So people are just going to want to take all his money and therefore buy against it because more often than not the larger engulfing candles ping back the way.
This is the first example I could find (EURUSDengulf), now, lets imagine that there was no resistance before hand, (i cant find any without). I would never trade this large engulfing candle because it has took far too many pips from the table. If it does go on to drive the market down then so be it, but one of the main things we need to do is manage the money going out of our account, so I am more than happy to stay out that trade and scratch that from the battleplan.
I think what I have learned the most is just to purely imagine exactly how others would treat the scenario. Since the market is made up of people all doing the same thing, then just like you or I, they too are deciding when to buy, or where to put their stops etc, So i find it hard to believe that people would think that the market would have enough ‘ooomf’ after a large candlestick like that.
I’ve been reading the book Rich recommended ‘come into my trading room’ and it gives a great insight into how to picture the market.
On the exit strategies, am actually not having too much bother with them, its only when I see the market starting to have a tussle before my ‘take profit’ line where I start letting emotions get the better of me. When I write up my battleplans most of my analysis for target areas comes from the 1hr chart, ( i was going to post this last night, but i needed my bed hahah). USDJPY i wasnt going to trade until it past that gold line (resistance), and I knew I wanted to take my profits no further than 124.395 because there was resistance right there, and also when i zoomed right out there was even more resistance on this line, so i didnt want to take my chances by stretching my target beyond this. However, if it did break this level, then I would of been more than happy to find another reason to BUY.
i use daily chart for overall fib levels and directional bias, and often I find that these lie perfectly on most of the support & resistance on the 1hr chart.
You approach trades nearly the same way as me, I leave my laptop running all day though, I am more than happy to trade all day, and setting alerts as you have said is pretty much the same way i go about it. I also sometimes put 15min alarms on, so i know i need to glance back at the charts and see what has happened. I tend to leave my positions open all evening if i know i am not doing anything else, but when it gets to 6olcock i tighten them up or if something like news is coming then i will just close them.
Im not even sure if i have replied to what you said or just went off on a tangent, but i hope that helps anyway hahah.
Lewis 🙂July 30, 2015 at 6:41 pm #1528
Thanks for the advice, am definitely going to look into this. Ofcourse, this will add more variables to the picture, so i will probably leave it a couple of months before i start thinking about this haha.July 31, 2015 at 7:34 pm #1537Keith BowtellParticipant
How do you enter multi stop losses in M4 to enable scale out?August 1, 2015 at 8:14 pm #1538Simon DydeParticipant
You’re ahead of me Lewis. After looking at my results I’ve come to the same conclusion about big candles. I’ve looked at my live trades and my dummy trades and it does seem as though the big candles sucker me into cramped positions. I’m going to think about this and figure it out.
The big candles are the big players, no doubt. They actually buy and sell in the market. We just have a bet with a broker so don’t influence the price at all.August 3, 2015 at 10:35 am #1545
Hi Keith, you’d have to manage your position in a pretty hands-on way i.e you’d need to be at the screen as the market traded into your target area. You’d have independent limit orders for your targets (you’d select them from the ‘pending orders’ tab once you were filled on your entry, or even have them in place before the market traded through your entry price) and you’d run a separate stop order covering the size of the current position. You’d cancel and resubmit the stop order as the limit orders got picked off e.g. you’d have a stop order for 50p per pip, your first 10p target is filled, you’d cancel your stop and resubmit for 40p per pip etc.
Another way you could do it is to place 5 independent entry orders for 10p per pip each to give you the overall 50p position and specify the separate target prices and stops attached to each entry order.August 7, 2015 at 11:24 am #1552DAVID KINGParticipant
Hi all, very interesting thread. Looking at engulfing candles, I think that Rich said in one of the tutorials that they should be ‘in keeping’ with the previous candles, or some phrase like that. So I too think that very large candles are to be avoided.
I also like to look at ones that have little or no wick at the direction we want to go, these seem more reliable. I wonder if we are all in agreement?
By the way Lewis, did you come to any conclusions regarding your back-test analysis of engulfing candles?
Good luck all…
Dave.August 7, 2015 at 4:37 pm #1553
Yes, I have the results of GBPUSD, EURUSD, and EURGBP from april till this month. I’m going to get the results for USDJPY and AUDUSD next week. I will probably get them posted by next thursday or so 🙂
The results are amazing, lets just say that haha. A couple of variables etc that I will need to explain, but i will type it up next week.
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