ATP (Advanced Trading Philosophy) - Positioning For Success

thanks for your feedback. I hope to see you visiting again.

Stop Losses and exit points are a very important part of trading. If you set them to close you can get stopped out too early and if you set them too far away you either lose to many pips in one trade or else give too many back as the market retraces. Personally I would rather give some pips back then lose too many before the trend actually developes.

Managing your initial S/L is a relatively simple task. I can't think of one single trade where you should not put in a S/L at the same moment that you decide to make a trade. Because of the needed time to manage your trades, I prefer to make this a very simple process. My S/L settings are as follows:

1. If you are pending a short order, your S/L would be set at the high of the set-up bar + 1 pip +spread
2. If you are pending a long order, your S/L would be set at the low of the set-up bar - 1 pip.

I stick by this rule no matter if the S/L 100 or 350. Because we are going for the trend, you need to give each of your trades room to develope. The only time I will modify this is if the S/L would be too low...like say 50 or something. In a case like this I will most likely default to 100 or use the high or low of the bar that is previous to the set-up bar.

Managing your positions and exiting your trades is probably the most important aspect to this whole strategy. Later I will dedicate a whole post to this philosophy and offer you a sreadsheet for making your job as easy as possible. For now we are going to look at the triggers that would get you to change your S/L settings based on trend reversal criteria.

My basic philosophy for exiting the market is this: I want to give the market every chance to continue in the direction of the trend because that is where the big money is made and I will not fret any small losses I take along the way because they will pale in comparrison to what the trend will give me in profits.

I have identifed three different strategies that you can use to exit the market. Once again, exiting the market is a very personal thing. You should chose the option that you are most comfortable with.

Defined Exit Strategies:

1. Early Exit Strategy: This exit strategy is signaled when there is a ST dot that is present at the close of a stick and the NL has closed in Yellow. This would also be our Early Trend reversal indication as described in an earlier post. Once this exit strategy has been signaled, you would then place your close orders 1 pip + spread above the high of the bar that just closed for short trades or at 1 pip below the low of the bar that just closed for long trades. These signals do not have to happen on the same bar, but both need to be present in order to be a valid signal. Usually they will happen within 2 bars of each other.
2. Timely Exit Strategy: This exit strategy is signaled when the ST dot and the AC are aligned on the close of the same bar. If you look at the chart below you will see that my upper ST dots are colored Red and my lower ST dots are colored Lime. This means that for me to consider closing a long position I would need a red ST dot and the AC red on the close of the same bar only. And...in order to close a short postion you would need a green ST dot and the AC green on the same bar only. Once again you would then place your close orders 1 pip + spread at the high of the bar that just closed for short trades or at 1 pip below the low of the bar that just closes for long trades. See the chart below for a better description:
   1. Attached Image (click to enlarge)

      
      
   2. As you can see, the last ST dot was red and it falls in line on the same bar as a red bar of the AC. If I were to use this exit strategy I would place my Exit Orders for ALL trades one pip below the low of Friday's bar as I never use Sunday's bar for entering or exiting trades. As you can see this trade would still not have been stopped out. Since I am long already I am hoping that it will continue to go up

3. Trend Reversal Exit: This exit strategy is signaled when the ST dot and the AO are the same color. This change will rarely happen on the same bar. Most times the ST dot will precede the AO. You would exit a long trade when the ST dot is red and the AO has gone to red. You would exit a short trade when the ST dot has gone to green and the AO has turned green. When this happens, you can either simple exit the market at the open of the new day. or set your exit orders above the high or low as described in the other two exit strategies above.

General Exit Rules: Here are a few general rules to follow with your S/L and Exit Points.

1. Once you set yoiur S/L or exit points don't change it. Get comfortable with feeling confident about the decision you made even if it results in a loss
2. When I say don't change it, I mean don't change it until you get a new signal. then modify your Exit postion to that new signal.
3. Always leave that new signal uncahnged until you get a new valid signal.
4. Always use the most recent signal when modifying your Exipt points.

As for my personal opionion. I will use the Early Exit Strategy on very few occassions which I will get into when I intruduce you to that particular trading strategy. I will always exit using the Timely Exit and if that doesn't trigger I will always exit of course then with the Trend Reversal Exit. If I end up using the Trend Reversal Exit and am up a substantial amount of pips I will set orders to exit just to give my trade yet another chance to continue. If my pips in profit are low I will simply exit at the open of the next trading day.

Once again, you should use a strategy that works for you in a method that works for you. These ideas can either be guidlines to producing your own strategy or to use a you see fit.

Have a great night (or day) of trading and I will see you again soon.

@ Damon;

I appreciate all your hard work and effort to teach us this great strategy. Looks like we have a reversal signal, but we also need a reversal confirmation once AO closes with a red bar tomorrow and then the following day price moves below the low of the bar where AO closes red? Not sure I understand completely?

TimeFreedom

damonl...

Excellent eudcation here! Thanks for sharing and looking forward to more.

Hi Damonl,

I applaud your work and dedication to this project!! My question is, besides daily charts would your system and indicators work on smaller time frames with the same settings. I'm thinking they will but since you created this system, it's your opinion that counts.

Thanks Damonl for some thought provoking ideas.....T-Wolf

100% correct. If tomorrow at the close of the day, our current exit point has not been hit we would modify our exit point with the new information. We would also be cancelling any long trades we would have pending once price would pierce the lower barrier of what would be today's low.

I believe that they would work just fine. I am unable to put any time into trading them or testing them however.

If someone else decides to use this method on the lower TF's, you are welcome to post your experience on this thread in regards to how you are doing.

Thanks orion.

@ Damon;

Here is a chart of E/U with a reversal signal, Red ST and yellow NL, and it looks like we won't get a reversal confirmation, AO closing with a red bar, anytime soon IMO, and price will continue to head up without a continuation confirmation from the AO going from red to green. Where do we place the pending buy trades if we never get a continuation confirmation?

TimeFreedom

@damonl

Try the not repainting indicator from
http://www.forex-tsd.com/indicators-...icators-2.html

The first indicator posted by Damon looks nothing like the TSD non-repainting version on Forex-TSD. Did you try it on your chart?

TimeFreedom

Hi Damon,

Thanks for sharing, what looks like a good system! I have a few question:


What sucess rate do you have with this strategy?

How many pips do you average?

How long have you been using this strategy?


Thanks,

OK, they are not identical, but is possible to use the technic from the second indi and to rewrite the indicator for Damon...

Sorry TF...I don't see a long trade there right now. Only ones that would be pending. I won't see a long trade until the price closes above the ST dot. However, I see holding my long positions, keeping any pending long trades in place and opening up 1 short PENDING trade. Can anyone tell me where it is? However, if you feel that the price is going to move up, by all means go ahead and place your long order right now to be sure to catch the whole move.

No, I don't want to place a buy trade. Trying to learn your strategy. I think I learn best visually. Do you mind posting charts on a couple of pairs, maybe G/U and E/U to demonstrate your rules?

TimeFreedom

I will TF . Please remember that I am an active trader. Right now I am placing my trades for tomorrow. The next thing that I will give you is my spreadsheet to manage the trades and then I will go into the trades themselves.

Trust me.....with this philosophy, you arnt' missing anything by holding on a few more days.

Can anyone tell me where it is?

I appreciate your time and look forward to your teachings.

TimeFreedom

The most current short trade that i see is GBP/USD...The AO just closed red.

TimeFreedom