Well working exit strategy

You may have the best of trades that turned into a loser, or u lost extra pips. Or, you had a bad trade that made unexpected pips.
Both of these are telling us something. The exit is just as important as the entry!

Besides exiting around areas of support or resistance, sometimes we feel disappointed by either not closing out earlier or closing out too late (lost some profit)

well, this is a simple method i've created tohelp keep pips on the table. It is quite simple, i give it in 3 steps

1. Three bars after entry move your SL to B.E (break even)
2. When another bar has formed, count from the new bar 3 bars a back (lets call it bar X).
3. Place your SL at the low of (bar X) for buying positions or at the high of the (bar X) for shorts

My backtest shows that if the trades are bad, u will be stopped out early without losing much. If the trade is good (lots of long bars) you will be stopped out when the trend is first exhausted.

Worked for me, hope it worked for you.

P.S, just pick a direction and try it...I know it sounds silly (funny to me too) but this is just my observation. Hope you can double check it with me and report your findings.

This is a good exit strategy for a smooth trend.

How do you account for retracements?

I like your exit, thanks

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fibonacci tricks

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I do not, thats the thing. High Risk, reward most of the time as i trade price action setups. The next thing to test is to place the initail SL at 3 or 4 bars before current.

y not use a trailing stop based on atr or moving average?

That works too. But this is a different strategy we testing here. The problem with ATR is that u have to devise your own B.E strategy.

Upload a sample trade of ur using tiny pic?
As picture tells the thousands word...


Sonic

I must also add that u cannot move your Stop loss above current price, thats a given..so if the strategy is suggesting that you move your SL above or below a realistic level..just ignore it. You wont be able to move it anyways.

Before & after charts
http://i26.tinypic.com/2j5xnid.gif
http://i31.tinypic.com/nbdl5u.gif

I hope those pictures explained what i'm talking

Shouldn't be too difficult for the programmers to write a trailing stop ea based on this strategy. Maybe somebody is so kind to...

Yeah, we just need avg to good entry's and we are go!

Nice strategy Mr. Demark. Unfortunately there are not enough exit strategies found here on FF or most places for that matter. Only a hand full of traders here feel exits are more important then entries. I am currently writing out the rules of a few exit strategies that I plan to demo and test. I am clueless to programming and back testing, so I will forward test via demo account using a coin toss entry, or a trend based entry, or both. Why not? Trends are my bread and butter but I fell I can still optimize my system by refining my exits. Plus I need to work out an exit strategy for consolidating markets because waiting is just too boring. (Between Nov 08 to April 09 I made four trades for around 500 pips but still staring at the charts everyday) One idea that I will test is the 3xATR or candles as you have it which I learned from TYWTFF. Right now I`m using a Fib based take profit system with a 1% stoploss which is working quite well but I feel there is more I can do to make it better Anyways thanks for sharing and good luck.

You are welcome. I guess I am one of the few :-). Yes, sideways market can be BORING its killing me at the moment!

If u want, i give u an EA script to do a Live backtest (oxymoron i know) just the same as if you are trading in the present

gonna attach it.

TO use it u must:
Download data for chart and load it, start a backtest with the livebacktest EA

1. run a backtest with visual mode. Once the test has started u can load your favorite chart template with indicators and all.
2. Goto global varibles (or press f3)
3. THe variable u see are self explanatory. Close this window
4. To begin, start the backtest (press play).
5. To make a buy trade, press pause (or pause on keyboard), goto global variables
and enter 1 under "entry". This will tell the program u want to buy at the current price. Make note of the SL variable. This is Stop loss in pips from current price. (140 means 140 pips from current price)
6. Press F12 to advance 1 tick (or pause to unpause it and let it run) pressing f12 takes it one step at a time.
7. You will notice some lines appear on the screen (other than the norm). These are your stop loss and take profit lines, the beauty about it is that YOU CAN move these lines by pressing pause and drag to the level u want your SL to be.

That's basically it until u get stopped out.

To exit a trade before SL or TP enter 1 in "exit" global variable

Mr demark thanks for the promising strategy. May I ask where is the stop loss when a position is opened?

Looks like an excellent strategy.. also looks like it would work on about any time frame down to even 1 min and save a lot of pips from being lost.

geez. Exit strategy should only ever be based on one's perception. I am not a newbie, I trade for a living.....believe me, you need to be able to look at charts and decide when you when you need to get out. No 2-bit EA from a FF forum will make you profitable. promise, Stop relying on computer programs. Your brain is way better than any program out there and this will continue to be the case for many decades. Please take this from someone who KNOWS. I'm TRYING to do you a FAVOR!

(No 2-bit EA from a FF forum will make you profitable.) This is NOT true-at least for me. I do agree that no EA is a match for the trading Brain. I profit weekly from an EA and dont suffer ANxietyDrawdown(as much) and dont have to babysit my open trades either. Ea trading was my salvation-but exits are(for me) the hardest part of trading.

Well tell us a little about yourself and your trading styles lizard.......

You determine where that is. By default u will see 150 in the SL variable (or 200) this means 150 or 200 pips from the current price.
you will have to use the cross hair tool on the chart to measure how far away u want your SL to be

@Lizzard. This is not a computer method it is based somewhat on psychology.
We understand that a trend may consist of smaller inner trends or ABCD wave patterns. This method, depending on the timeframe will catch those inner trends and not necessarily the long term trend.

The psychology behind it is that u want to get out when the trend has died down. How do u know that the trend has died? when it runs out of steam..or when it has failed to make higher highs, or lower lows. Normally candles level off or start going sideways for 4-5 candles before making a retracement. THIS METHOD AIMS TO EXITS RIGHT BEFORE THE RETRACEMENT.

It is also not a proven method, we are trying to prove it here. As i said, double check it with me and tell me what u find. We can always revamp it or come up with something totally new

That's all we are trying to do here.

PS:The market has been really choppy since lately, i haven't traded since a month ago becuz i saw no clear entries.

With a good enough exit strategy one wouldn't need a clear entry other than to just enter. Breakouts on shorter time frames could be an entry for example.