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Exit is more important than the entry

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  • First Post: Jun 1, 2012 12:10pm Jun 1, 2012 12:10pm
Exit is more important than the entry...

How manage your trades ?

have you an good method ?

when exit ?

thank you
Quoting wallstreet03
Exit is more important than the entry...

How manage your trades ?

have you an good method ?

when exit ?

thank you
Profits and losses are important. They are made up of your entries AND exits. They are equally important.

Your other questions can easily be researched in the market. Give yourself a year or two and study the market.
agree exits are more important...

mainly because psychologically humans find holding their winners for targets harder than actually entering the trade...

Just ask a learner what they find hardest to do.. they all close early, it's just how we are wired...

Also, get some data from brokers about retail traders...

Most have a decent win/loss rate, but they have losers bigger than their winners... its a fact.
tradewith60
Quoting 60minuteman
agree exits are more important...
This is absolutley INCORRECT

To say that your exits are more imporant than your entries is like saying your heart is more important than your brain.

The one hard and fast statement that is true is; The most important part of any trading system is capital preservation. Preserving it in the way of taking a profit when it is given and taking your loss according to plan.

Every part of your traing strategy has an equal amount of importance when the whole system comes together. You need to time your entries in the direction you are trading, then have a plan for what you do for every step of the way until you exit the trade with either a profit or a loss.

Do not focus on only a trading strategy for it's exits.
Do not focus on only a trading strategy for it's entries.

You need to focus on how all of the the parts intreract with each other when combined.
Nothing is impossible, with a willing mind!
Quoting Trader_V
This is absolutley INCORRECT

To say that your exits are more imporant than your entries is like saying your heart is more important than your brain.

The one hard and fast statement that is true is; The most important part of any trading system is capital preservation. Preserving it in the way of taking a profit when it is given and taking your loss according to plan.

Every part of your traing strategy has an equal amount of importance when the whole system comes together. You need to time your...
wrong... you've made the same mistake children do when sitting exams...

you didn't read the question.
tradewith60
Quoting 60minuteman
wrong... you've made the same mistake children do when sitting exams...

you didn't read the question.
I in fact didn't answer the question(s) at all. I merely responded to the incorrect statement of "Exit is more important than the entry..." from the 1st post which you agreed with.
Nothing is impossible, with a willing mind!
and moreover... if capital preservation is so important... is that not using the correct exit?

So yes, exits are more important.... but theyre not the only important thing..

The risk model is the important thing.
tradewith60
If you mean TP with exit then i would say wrong... Your entry (coupled to your SL and of course not hitting it too often ) defines your pipvalue and with it your profitability. If your entries are spot on along with tight SLs your exits aka TP are still important but only to the point at which the money batters you to death because you didn't put on that helmet. How i manage my trades? Make those entries spot on with super tight SLs around 5-12 (not fixed) and take profit right on the spot when it hits the first bump. If the next tfs / highers are bump free let it ride. Along with compounding the correlation between pipvalue and amount of pips you get out of this is ... decent.
Quoting unknown4x
If you mean TP with exit then i would say wrong... Your entry (coupled to your SL and of course not hitting it too often ) defines your pipvalue and with it your profitability. If your entries are spot on along with tight SLs your exits aka TP are still important but only to the point at which the money batters you to death because you didn't put on that helmet. How i manage my trades? Make those entries spot on with super tight SLs around 5-12 (not fixed) and take profit right on the spot when it hits the first bump. If the next tfs / highers...
not hitting sl too often? how is that relevent...? what if your R value is 10? and you risk 1% a trade? you can hit your stop loads of times and still make profit...

this guy is far more qualified to explain it than me (and most on this forum too)
http://www.nobrainertrades.com/2010/...placement.html
tradewith60
Of course. Matter of fact statistically those 90% fail strategies are on the fail side of things though even if some are overall winners. The problem with it is that it takes a lot of fails for you to realize that something is wrong... Most of the time that is well too late
Quoting 60minuteman
and moreover... if capital preservation is so important... is that not using the correct exit?....
Rookies often make this mistake (not that I am calling you a rookie). The largest part of capital preservation is knowing when not to be in the market. Therefore, if you are not already in the market, a position one should find himself most often it, exits don't matter. After all, you can't exit a position you never entered.
Wyckoff VSA: (1) Supply & Demand (2) Effort vs. Result (3) Cause & Effect
Quoting HiddenGap
Rookies often make this mistake (not that I am calling you a rookie). The largest part of capital preservation is knowing when not to be in the market. Therefore, if you are not already in the market, a position one should find himself most often it, exits don't matter. After all, you can't exit a position you never entered.

Very nice and very true HiddenGap. A position I failed to mention in my post.
Nothing is impossible, with a willing mind!
Quoting HiddenGap
Rookies often make this mistake (not that I am calling you a rookie). The largest part of capital preservation is knowing when not to be in the market. Therefore, if you are not already in the market, a position one should find himself most often it, exits don't matter. After all, you can't exit a position you never entered.
thats another type of capital preservation... i believe the op is making the assumption that we are taking trades.. i.e entries and exits...

and again if you look at the data, the largest part of capital preservation is clearly ensuring your strategy is profitable by way of a risk model.
Check the data available from the brokers with the largest amount of retail traders.... The majority have a good win rate but their losses exceed their wins.
Thats hard data, not a newbies, or experienced traders assumption

or we could add, major news releases etc etc etc...
tradewith60
OANDA’s market data tells a very different story. Retail forex traders are actually much better at trading than people think. For example, in reviewing all retail trades executed during the year 2010, 55% of these trades were closed profitably. Which is really quite amazing. Our clients are far smarter and better at identifying trends than they are given credit for.

Nevertheless, our clients collectively lose money overall. This may seem like a contradiction, but it actually makes sense when you examine their trading behavior. While the retail trader more often than not identifies trends correctly, he or she closes out profitable trades relatively quickly but allows unprofitable trades to run, hoping for a trend reversal. As a result, the losses realized on unprofitable trades tend to be greater than the profits realized on profitable trades.

In other words, the retail trader gets the direction mostly right but fails at risk management. The behavioral pattern of retail traders tends to be the opposite of that of professional traders, who cut losses short but let profits run.
tradewith60
Cut your losses, let your winners run..... that is the exit talking.

However, exits aren't worth much if one can never get the entry correct.

In the end.... this argument can go on and on like apples and oranges.

Everything is important.

*( @ no one in particular )
Quoting 60minuteman
While the retail trader more often than not identifies trends correctly...

55% of these trades were closed profitably. Which is really quite amazing.

In other words, the retail trader gets the direction mostly right but fails at risk management.
Honestly I just don't believe this is accurate. Getting the direction right is the difficult part of trading, as is trend identification. If risk management means knowing when to exit, doesn't that fall under the same category of understanding direction and trend characteristics? That 55% win rate number doesn't really tell you anything. Grid trading, for example, was very popular at Oanda. That would easily skew any win% stat to the high side. A gazillion 1 pip profit trades and then those 2 or 3 danglers that end up killing the account, but you'd still have a great win percentage. If you saw the stats of a blind grid trader would you say that they were 'good' at picking direction or 'good' at identifying trends? No, in fact they are terrible at it, thats why they trade grids...but I think that type of trading is fairly representative of retail trading. Enter a trade, pray it moves in your favor, if it does, close it the moment it starts ticking back against you. If the trade moves against you, hold onto it until it 'at least gets back to break even'.
Quoting 60minuteman
.....closes out profitable trades relatively quickly but allows unprofitable trades to run, hoping for a trend reversal. As a result, the losses realized on unprofitable trades tend to be greater than the profits realized on profitable trades.
Proven human characteristic;

The fear of loss is greater than the desire to win.

With that in mind the exit becomes more important, whether in profit or loss?
When the Joker is in the deck.. fear not and play it well
Quoting Slim Buffett
Proven human characteristic;

The fear of loss is greater than the desire to win.

With that in mind the exit becomes more important, whether in profit or loss?
In one of the trading groups where I am a member we all trade the same strategy,and although we are all very good at picking entries/direction now, the real defining factor between who is profitable and who is not are the exits...

So based on my own experience they are more important... and hardest to improve upon, even the traders on demo still close early when they know for a fact based on their data it is the one thing holding them back
tradewith60
Quoting Aldente
Honestly I just don't believe this is accurate. Getting the direction right is the difficult part of trading, as is trend identification. If risk management means knowing when to exit, doesn't that fall under the same category of understanding direction and trend characteristics? That 55% win rate number doesn't really tell you anything. Grid trading, for example, was very popular at Oanda. That would easily skew any win% stat to the high side. A gazillion 1 pip profit trades and then those 2 or 3 danglers that end up killing the account, but...
I have got to disagree with that... but i guess it depends on your trading style as you say...

But this month it wasn't hard to pick direction was it?
it wasn't hard to determine we were in a trend was it?
all of the tried and tested formula's / techniques for identifying a trend worked, picking where it would end wasn't so easy...

Maybe people just don't believe in the simple, well proven techniques anymore, but hey if they all want to go long when the big boys are going short then that's fine with me
tradewith60
Quoting 60minuteman

But this month it wasn't hard to pick direction was it?
it wasn't hard to determine we were in a trend was it?
all of the tried and tested formula's / techniques for identifying a trend worked, picking where it would end wasn't so easy...


A month ago, it would have been hard to pick this direction, for this length of time, yes. Now, a month later, looking back at what happened? Nah, its pretty easy to pick out short entries now on the completed chart. As you say, if knowing when a trend is going to end is so hard(and it is), then how could you so confidently have shorted this "trend" if you yourself are saying you have no idea when the trend might end, any of your short entries could have been "the end" of the trend, right?

Picking where a trend might end is exactly the same as picking where a trend might BEGIN, both difficult, both equally important(in fact they are the same thing).
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