Determine the required triggers - part 3 of the trading process.
This entry will focus on exits.
Well, I have put it off for as long as I can. I have to come up with an exit strategy if I plan on practicing tomorrow. So here it is (after an evening enjoying Father's Day with family and friends and a couple of glasses of red wine to facilitate the philosophical/introspective process):
I am going to stay in the trade for as long as I judge that the stock is still moving in the expected direction (by visual inspection), or after a big move in the expected direction (by visual inspection).
Heh.
Nothing new here... at least at first glance. The distinction however (I am counting on it at least) is that I don't think that I have ever let my intuition have free reign in the exit department. Not that I haven't tried to - but I can say with certainty that up to this point, they have all succumbed to left brain thinking As with all the other practice applications, from here on out, there will be a self imposed 15 second time limit - the lack of a decision means the stock has stopped moving in the expected direction.
I may even pull out the stop watch.
Ok - paper trading for the week, following the established yes/no time limited guidelines. After a good nights sleep. Simple is as simple does.
May your analysis be fuzzy and your trades expedient.
Hey man, a good start for your exit plan may start with the underlying market structure, and what kinds of events you can sit through. For example, the market is generally made up of pushes and pauses. Either we are chopping around, or momentuming in either direction. Perhaps you could ask yourself whether you want to sit through pauses in whatever moves you are trading. That would of course be conditional on your time frame as well- pauses are experienced differently on a 5 min chart compared to a hour.
ReplyDeleteEveryone is different, some will sit through a pullback against their position and let it run. Some book into momentum, and wait for the next pause to re-enter. Which feels right to you?
Hope this helps with your exits
Good thoughts Tarigal - thanks for sharing bro!
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