Exit: Set TP/SL or Reverse Signal? | Forex Factory

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Exit: Set TP/SL or Reverse Signal?

  • #1
  • First Post: Edited Apr 15, 2011 12:27pm Apr 14, 2011 8:22pm | Edited Apr 15, 2011 12:27pm
Exit strategy in my opinion is one of the harder things to learn as a beginner. Exit obviously depends on the "system" and money management method being used, but want to get some thoughts on which ones people use and why. So, what exit strategy do you think is best? Set Take Profit/Stop Loss, Reverse Signal or other? Why or why not?
  • #2
  • Apr 15, 2011 7:38am Apr 15, 2011 7:38am
Any thoughts?
  • #3
  • Apr 15, 2011 12:19pm Apr 15, 2011 12:19pm
This usually depends on if my trailing stop was hit, or even activated. If my trailing stop made a great profit and a large movement, then I'm more likely to exit, then enter on the other side. I wouldn't do that if I just got stopped out though, or if my trailing stop barely even moved before getting stopped out.
  • #4
  • Apr 15, 2011 12:35pm Apr 15, 2011 12:35pm
I've been attempting to scalp profitably for awhile now.
After using extensive support and resistance analysis for some time,
(and not being amazing successful)
I'm leaning toward a timed-based stop-loss and time-based exit.

Exits have been very difficult for me to master...
so I'm transferring more of the 'responsibility' to my entries.

Similar to what I am using now on EUR/USD:

1. Entry

2. If trade is not slightly (2 pips) profitable within 4 minutes, close trade.

3. If at 4 minutes trade was profitable by at least 2 pips... hold trade for 13 minutes, then exit.

4. 10 pip max stop-loss with initial entry.
This could be hit before the 4 minute evaluation or anytime after the 4 minute evaluation if trade is still open.

I've found these time-based exits have performed better than my own discretionary exits.
Basically, I try to just concentrate on entry now, buying pullbacks within trends as I define them.
It is still a 'work in progress' with forward testing.
  • #5
  • Apr 15, 2011 1:56pm Apr 15, 2011 1:56pm
Quoting Intu
I've been attempting to scalp profitably for awhile now.
After using extensive support and resistance analysis for some time,
(and not being amazing successful)
I'm leaning toward a timed-based stop-loss and time-based exit.

Exits have been very difficult for me to master...
so I'm transferring more of the 'responsibility' to my entries.

Similar to what I am using now on EUR/USD:

1. Entry

2. If trade is not slightly (2 pips) profitable within 4 minutes, close trade.

3. If at 4 minutes trade was profitable by...
Intu interestnig approach.
How did you come up with those numbers? (2&4&13 minutes)
You did any testing on this?
I have difficulties with exits also,have tried many different approaches...seem to me I am the most comfortable with taking profits by parts. If i get some offcourse

regards
  • #6
  • Apr 15, 2011 9:44pm Apr 15, 2011 9:44pm
Heya Tilt,

I scalped quite a bit last year. (1000+ trades)
I took a hard look at hundreds of my trades and found that I basically
wasted time with trades that didn't start profitably (even if later they
were exited for a profit or smaller loss). The bulk of my profits came
from trades that were profitable within the first few minutes.

As for exits.... in the short time frames...
13-15 minutes seems to be plenty of time for my style of scalp entries to
mature...if they are going to at all.

I have no faith in MT4 backtests, but am working on my mql4 so that
I can create an EA to mechanically forward test my ideas on a live account.

I trade these ideas right now, but... with current volatility and what I feel is 'thin' volume...
I lack the discipline to not tinker with my exits.

Lately, with less than 100 trades completed (not enough to be statistically valid)...
I've found that a 13 minute holding period, with initially profitable entries, trading with
the short-term trend as I define it, seems to do just as well as me analyzing and agonizing over my exits.

Let's see how the next 1000 exits go.

note: I was initially inspired to consider time-based exits based upon
Curtis Faith's example in Way of the Turtle, pg. 140-143.

Basically, he tested a Donchian Trend system with a Time Exit.

(from the book)
"It exits the trade after 80 days and does not use any stops whatsoever.
There are many traders who state that entries do not matter; only exits do.
This system is my response to that statement."

When comparing that system with others with more complicated exits over the same 10 year period,
it performed better than he imagined.

He goes on to say, "So much for the idea that it is the exit that makes a system profitable.
This shows that an entry that has an edge can account for the entire profitability of a system."
  • #7
  • Apr 15, 2011 10:13pm Apr 15, 2011 10:13pm
Quoting 2+2=4ex
Exit strategy in my opinion is one of the harder things to learn as a beginner. Exit obviously depends on the "system" and money management method being used, but want to get some thoughts on which ones people use and why. So, what exit strategy do you think is best? Set Take Profit/Stop Loss, Reverse Signal or other? Why or why not?
In my opinion it really depends on the market dynamics and the setups at the time over a number of timeframes. I use higher timeframe to (try) and set a bias for how far I believe the market can run. It is quite simple with most active pivot zones (S/R) along with some simple trendlines. If I am trade a shorter timeframe (15m, hourly) then I am looking for factors that may weigh on where the trade can run, also with the higher timeframes also looking for the horizon. One thing I have incorporated and it has been successful for me is the slowly move my SL to breakeven with the use of an indicator that when in play and the market moves fluidly can be extremely handy and when the market consolidates it really does cut alot of the risk out of the trade.

The take profit side of things can be somewhat trickier because you want to extract as much as possible without removing yourself from the trade that can run and this is where my bias from higher TFs comes into play (provided emotion doesnt) because if there is relatively good strengths showing in the direction of the trade then you want to let it pan out.

For me the biggest reason behind recent success' has been simply from the continual limiting of risk while leaving a trade open for runs. It allows you to minimise losses whilst having the potential for good gains.

RT
  • #8
  • Apr 16, 2011 12:43am Apr 16, 2011 12:43am
Quoting Intu
Heya Tilt,

I scalped quite a bit last year. (1000+ trades)
I took a hard look at hundreds of my trades and found that I basically
wasted time with trades that didn't start profitably (even if later they
were exited for a profit or smaller loss). The bulk of my profits came
from trades that were profitable within the first few minutes.

As for exits.... in the short time frames...
13-15 minutes seems to be plenty of time for my style of scalp entries to
mature...if they are going to at all.

I have no faith in MT4 backtests, but...
Thanks man,for the lengthly reply
I see what you mean! The reason I asked was because I also use very short term strategy,scalping most of the time but trying sometimes to let a portion run for longer,and I have noticed the same thing regarding connection betwen a profitable trade and time elapsed on it.
Haven't test the idea or anything but somehow I feel I would cheat myself of trades potential if I would just get out based on time if the trade was already profitable,but it makes perferfect sense however to cut the trade loose if it doesnt move in a few minutes of your entry! Cuz in scalping you expect to be moving shortly after you enter or there isn't any reason to scalp it anyway.

Best regards
  • #9
  • Last Post: Apr 16, 2011 1:21am Apr 16, 2011 1:21am
Quoting 2+2=4ex
Exit strategy in my opinion is one of the harder things to learn as a beginner. Exit obviously depends on the "system" and money management method being used, but want to get some thoughts on which ones people use and why. So, what exit strategy do you think is best? Set Take Profit/Stop Loss, Reverse Signal or other? Why or why not?
I let my trades run until fundamentals change.
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