Multi-Lot Multi-Timeframe Position trading

OK, good. We'll combine those into 6) Selling to raise margin or maintain equity curve (Money Management reasons)

That's a good list of whys to exit. Tomorrow we'll start going through the whens and hows of exits, the most interesting parts. Our goal here is to tear exits down to their smallest parts and examine them in the greatest detail that we can manage. I'd be very pleased if we could manage as a group to analyze exits in greater detail than has ever been done anywhere. We will study this one aspect of trading until we are Experts At Exiting. This is quite a project. When and how to exit may or may not vary, depending on your system and which of the 6 above reasons you are exiting. Great fun!

Oh well, I exited 6 Yen long positions at about 200 pips each, but then I went back in and added 2 more back. They went straight to profit, so I guess the Japanese aren't quite satisfied yet. They haven't announced a goal so there is no way to know what their actions will be. I have happy dance TP's set at 300 to 400 pips above the current price. I doubt they hit, but if so that would put the yen back around 123.0 or it's 2007 value just before it's great fall. We'll see.

Sleepy time

I actually posted a comment/suggestion a few pages back but it appears as though it was overlooked so as you're prompting viewers for responses I'll try again.

Perhaps one reason you're not attracting the desired levels of interaction is the fact there's no transparency accompanying your posts & comments regarding the large profits you appear to be consistently accumulating.

Given the amount of time you've spent on retail trading forums over the years you will know all too well that thread vendors claiming high success ratios, allegedly large profit returns with little mention of losing runs/drawdown are viewed with suspicion & distrust.
It's the old "looks too good to be true" syndrome.

These days however, with the advent of statistical data recording applications such as fxbook & trade explorer, there's no reason at all why thread vendors hosting tuition/instructional threads can't link their live account/s to one of these data recorders. Not only does it cement & promote credibility but also total transparency, particularly when profits/large pip collections are continually inferred.

If you’re concerned with security you could simply link your trade explorer to a demo & it would link your activity via that option.
How about it?

There's no need to post anything like that, because it's not relevant.

For me, following this thread is a way to help tune my own trading...not 'learn to trade like Graviton'. I was already doing some of this already, but it's always helpful to see others people comments about how they do it.

Secondly, Graviton is a fairly good writer and is explaining how and why he is trading...irrespective of his indicators, pairs, etc. If he does mention specific pairs or use chart examples, it's more to explain the process behind his thoughts, NOT a "do this trade" idea. He is discussing ways to think about trading, such as entries, exits and money management - not systems or signals.


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Please don't divert this thread by getting into a slanging match about "no trade explorer - then just talking nonsense. prove it".

As for his results, I am in exactly the same boat as AG and G on UJ. Have been holding some longer trades in UJ and still waiting to profit from some of them. For example: 109.615, 113.62, 114.345, 115.3, 115.638, etc. The market is currently actively retreating from a significant high and it will be interesting to see how far it falls back (and whether/when I need to decide to exit and keep the remaining profits).

That's your opinion & you're entitled to voice it, as am I.
This is an open forum & Graviton asked for comments & suggestions.
It's entirely relevant in the context to which i've commented.
Unfortunately, you're not always going to agree with every comment or suggestion posted, but it doesn’t mean I or anyone else should be prevented from posting one.
I wholeheartedly agree.
I also completely concur with your observations about not encouraging or leading viewers into executing his personal trade set ups.
But all of the above has absolutely nothing to do with why I have asked him about linking his claims regarding his live account performance to a trade explorer.
You know that & I know that.
I have no intentions of diverting this thread.
Once again, Graviton asked for comments & suggestions directly related to this thread & his trading & I've posted as such.

Now with all due respect hold the drama & allow him to speak for himself regarding the request to link his live performance to a trade explorer.

Yes, it's a fair comment and I have considered it. Security is the concern as you have noted. I'm ok with the level of participation. Those who want to follow along are welcome to. Those who decide it's not worth their time are entitled to their opinion. I have nothing to prove here. It's more of a way to organize my thoughts and get feedback from other traders. If it helps another along the way, it's a positive thing. Thanks for your suggestion. I will consider it.

Ok, cool. As I said in my previous post I'm not intending to disrupt or divert your thread from its core focus, so this will be my final contribution to it.
I'm rather surprised this subject hasn't been raised already considering some of the content, so I suppose it was only a matter of time before it floated up.
Well I disagree entirely.
You've exposed yourself to this small series of posts due to the constant references & claims of consistently large profits resulting from this collection of material.
If it's merely a place in which to gather & share thoughts there would no reason to keep referring to the subject matter which prompted my posts.

These independent performance apps provide a very important dual purpose.
Not only are they incredibly helpful to retailers in identifying focus points for them to zone into & analyse their activity, they're also perfect vehicles for keeping traders honest by presenting total transparency of results & performance.

You & other likeminded thread vendors could possibly argue there's no real need for the former, but there are an awful lot of members scouring this & other retail forums who would agree an absolute definite requirement for the latter, particularly when you're giving the impression of achieving the results you claim without providing accurate or irrefutable evidence.

But anyway, it's out there now for those who wish to consider & cogitate.
As promised, I'll leave you to your endeavours.

Thanks to all for the good feedback. Moving on in our study of exits. I propose there are two ways to exit depending on your trading style, mechanical or discretionary. If your trading method is mechanical and you'll always exit when a certain condition is hit, like price falls 2X atr of your trading timeframe, or whatever, then your exits are locked in and no further analysis is necessary. If that works for you, I don't want to disturb a winning traders style. If you take discretionary exits, then it may be beneficial to look at those in more depth.

Expert Exits-1)The trade is losing-1)Right after entry

We identified 6 reasons to exit a trade. Let's look at each of those in more detail and examine the best possible discretionary exit method for each reason we identified. Since the Why's have been listed, we can look at the when's, where's and how's of the exits for each why.

The first reason to exit was that 1) The trade is losing. I've discussed exiting losing trades at length here and there is no reason to go over all my thoughts on it again, but I will summarize. As to when, a trade can lose 1) on entry, 2) after it has gone up a little and then returned to entry, 3) after it has gone up a lot and then retraces. In the first two cases, the loss is of real trading capital. In the third case the loss is of paper profits, or unrealized gains. There is a physical difference between these two types of loss. I can buy a nice meal with real capital. I can't with paper profits. But, a loss is a loss and we don't try to justify it, we just try to minimize it's impact. Of course we can't avoid all losses in trading, so the next best thing is to minimize the impact of those losses. That must be our goal of the first of the 6 reasons why to exit.

Entry losses must be minimized. For simplicity let's just consider long trades. When we enter a trend trade, we intend for price to go up very soon. One of two things happen, price either goes up or down, call it a 50/50 chance. If price goes down right away, one of two things have happened. Either we have made a bad entry, perhaps on a peak price right before a major retracement, or intrinsic market volatility (randomness) has initially moved price down a little bit, and it will soon recover. Another way to look at it is that perhaps what we thought was a trend wasn't a trend at all. Perhaps it was just random motion of the market all along, like flipping a coin 4 heads in a row, or alternatively, perhaps the trend is valid and we were just hit with a bit of randomness just as we entered and it will soon pass. In either case, we must limit the loss on entry to minimize it's impact. That leads us to the question of how?

How confident are we that what looks like a trend on the chart is really a trend and not just random price motion that can look like anything, including a trend? Is there a good fundamental reason that it should be a trend? If there is, then that increases the likelihood that it is indeed a trend and perhaps we should be a bit more forgiving of a minor drop in price right after entry, but even still, entry losses must be contained. The question now is where?

If we entered what looks like a good trend with a good fundamental basis, like central bank policy, then the quick entry loss is either due to intrinsic market volatility or a major retracement starting right after our entry. Intrinsic volatility wont move price much and will pass quickly. As long as the loss is a very small portion of our average wins, say 1/5th to 1/10th an average win, it can be tolerated. So if our average win is 400 pips, an entry move against us of less than 40 pips could be considered insignificant and above 80 could be considered significant. Between 40 and 80 we'd need to apply our judgment and knowledge of the technical strength of the trend and fundamental factors to make the best decision we could make. But if our average win is 100 pips, then an entry loss greater than 10 pips + spread is getting significant, and by 20 pips we'd have to think about containing the entry loss and just exiting.

So there are really at least two factors at play here: How confident are we that what we thought we saw as a trend was really a trend, and how significant is the move against us? I increase my confidence with more confirmations on multiple timeframes, confirmations among multiple reliable indicators, and a good understanding of the fundamental factors that I believe underlie the price movement. The higher the confidence level, the more I leeway I am likely to give a misbehaving entry. But there is always the possibility that we have entered right at the beginning of a major retracement. It happens to the best of us and it can't be completely avoided due to randomness in price movements. We don't want to exit early from what seems to be a good trend just getting knocked down a bit by some quick intrinsic market volatility, but we have no choice if we are going to limit entry losses. If it turns out we were wrong about it being the start of a major retracement and this is a real trend with just a little market volatility, the loss from the early exit was insignificant and we can re-enter later if our entry criteria are satisfied, and at least sometimes at an even better price. That path will never bust our account and we can easily recover on just one good trade following the decision. It wasn't a bad decision. It was just wrong. There is a difference. A wrong decision can easily be compensated for later. A bad decision can lead to financial ruin.

So, my conclusion of the first reason why we would exit 1) The trade is losing, and the first where 1) right after entry, is basically to follow the old saying and "cut losses short". That decision is a good one, whether it proves out to be right or wrong. If it proves out to be right, we have avoided a large loss. If it proves out to be wrong, it was still a good decision to make at the time with what we knew then, and we can easily recover. In no case should we ever let ourselves be in a position of needing to take a large loss. Winning traders never take large losses, they always cut them off while they are still small.

I'll leave it to each trader to make her or his own best decisions on how much entry loss to accept for a given situation, as long as it is not a large loss. Large losses should never be tolerated for any reason. That concludes all my thoughts on the first sub-subsection of Expert Exits, Exiting a losing trade, right after entry. The next is Exiting a losing trade, when it has gone up some and comes back to entry. I'll pause now for comments, questions, suggestions, clarifications or corrections.

Yes, as I said, I understand your points and I will give it serious consideration. Beyond the security concerns, there is the concern that some would just try to shortcut the method and follow my trades blindly. There is much to consider. Best success to you.

Hi G,

I do not want to interrupt your flow, but I am much more interested in your basic thought pattern than in specific trade results. I believe that a Trade Explorer etc. would be a real distraction at this point. I spent a lifetime in Academic Surgery with a primary focus on Resident education. My Residents crushed the competition on Board exams and Fellowship placement. The secret was to focus on broad principles first then drill down on the details as necessary to complete the picture. OK, sure, more to it than that, but you get my drift.

AG

Glad to see you are doing well Nefser. Yes, we have both been in the UJ trade for a while and it shouldn't come as a shock to anyone that we all made good pips in it lately. I'll try not to get quite so excited when a good trade takes off for me, but I do enjoy that feeling. I am sure I have paid my dues to experience it. I knew you and AG were in this one and would do well also. I guess some weren't in it and are a bit bitter over that, but I understand. Missing a good opportunity always feels like there was a loss, but really there wasn't. I miss hundreds of good trades in different markets all over the world every day, but they don't cost me a dime. Keep Calm, Don't Panic, Soldier on.

Thanks AG. Yes, I get your drift. We are trying to make the best decisions we can here with incomplete information in the face of a market that is riddled with randomness. I'm pleased with our results so far. I'll just continue on and we'll see where this leads us. Best success.

G

I'll continue. That last section, exiting losing trades on a bad entry was a bit long and tedious. The conclusion was to cut them short. How short is left up to the trader, but short enough so that a large loss is never sustained in that situation. The next sub-subsection is much easier.


Expert Exits-1) The trade is losing 2)After price has gone up some and returned to entry

It's not unusual for price to take off, return back down to touch the top of it's previous range, then turn back up for a nice big move. This is a classic breakout pattern that probably has a name somewhere in the literature. I call it a touch and go, but the point is, price has to turn back up for a nice move. If it doesn't, but instead continues down, we can soon find ourselves in a losing trade. The question is how long to hold it to see if it's still going to take off in our direction? The answer is that once it comes back below the original entry, it is already a bad entry. We certainly didn't intend for that to happen. The simple market dynamic here is the price did not have enough buyers to continue it's move up. One of two things will happen, either enough buyers will see that price has broken out of it's range and will quickly move in to send it higher, or they are just as disappointed as you are that price didn't continue it's move up and they will bail out and send it lower, call it a 50/50 chance, but disappointment can be a very strong emotion. If we can see that the bottom of the recent range of price is just an insignificant number of pips away, we can hold on for a bit to see if it turns before it breaks through the bottom of it's recent range, but beware. If price does break through the bottom of it's recent range, the shorts will pile on and there is the possibility of a large loss here. Many traders just lay in wait for such pattern failures and when they see one they pounce on it quickly, usually for profits. Type Forex failed breakout pattern into Google to see how many shorts are just standing by waiting to jump onto this one. Like the previous section, our goal will be to keep any loss insignificant. This is a pattern failure and we don't want to take anything more than an insignificant loss on it. This is a case where anything more than 1/10th of your average win size is probably too much to lose. So if your average win size is 200 pips, I'd cut this loss short around 20 pips or less, and try again later if your entry criteria is met.

Just because price was up higher earlier, it doesn't mean it will go back up there. In many if not most cases, it means just the opposite, that buyers are bailing and shorts are stepping in. Keep this loss very small and look for a trade that instead does not retrace back over your entry. Most really good trades wont do that. Once again, the watchword here is "cut losses short" and never ever let a small loss turn into a large one.

The previous two cases were very similar. both quickly went into a losing position soon after entry threatening trading capital. The conclusions were also similar, cut losses short or cut losses very short. This final subsection is quite different since it threatens our unrealized gains but should pose no threat to our trading capital.

Expert Exits-1) The trade is losing 3) After price has gone up a lot and then retraces

Just when we thought it was going to get easier, it gets complicated again. This is the most difficult and agonizing situation I know of in trading. Price has gone up nicely providing a good win, whatever you consider that to be, 100, 200, 400 pips or whatever. Now it has turned and we must decide what to do, stay in the trade and sweat it out or bail with our profits. Either decision might be right or wrong and neither will be right for all situations.

The first thing you'll need is a plan to get out of this situation with most if not all of your profits intact. It's best if that plan is formulated before you find yourself in that situation. It's very difficult to do careful analysis when you are bleeding pips.

First, if price is dropping unusually fast, MUCH faster than it has in previous retracements, and you have no idea why, just quickly bail out with at least 80% of your profits. This is guaranteed to happen to you if you trade long enough. That exit needs to be pre-planned as you might not have any time to think it over. You can always re-enter if things stabilize later, often at a better price. Half the time things will stabilize and you can re-enter the trade at a good price and continue on your merry way, but half the time price will continue down and take most or all of your profits. There is a good chance that there has been a news release that is causing the crash and you don't want to be the last one out the exit. After your profits are secured, you can scan all the news sources to see what is going on.

Most retracements will not be so violent. Price will come up against a resistance, gently retrace for half a day or less then continue trending in the original direction. If the original trend was chosen to be in the direction of the longer term timeframes, odds strongly favor the continuation of the trend after a brief retracement and/or consolidation. There is plenty of time to make a reasoned decision. The first thing to do is to see if something has changed fundamentally that could drive a major reversal. Such news is usually widely reported and easy to find. If there has been no major fundamental change, that increases the probability that this retracement will be short lived and price will resume its steady climb after all those who are scared out of the trade have taken their profits or hit their tight stops and exited with their loss. Some wise traders will routinely use these small retracements to add to winning trend trades and as they buy in, price will usually stabilize and then continue its trend.

That leaves the one situation where price slowly turns around and reverses long term direction without any fundamental change that is obvious at the time. In this rare case price does not stabilize, but continues to fall beyond all expectations. That happened in February and March of 2012 when the UJ reversed direction to move up from a steady 4 year fall. The Bank of Japan at the time was making moves behind the scenes to stem the increase in value of the Yen and slow the rate of deflation in Japan. Then as time passed it became obvious what they were doing, but those that had rode the trend down for years couldn't have known that at the time. Wise traders took out what profits they could and stood on the sidelines for 6 months until it was clear that the major long term trend had reversed. They then reversed their positions and have made 4,000 pips as the UJ has steadily climbed over the last year and a half. This is a real, but very rare situation. We can't allow our trading capital to be affected by this situation, but we don't need to panic either. The immediate threat is not to our trading capital, but only to unrealized gains. As I have stated before, these are two very different things. We should never allow this situation to threaten our trading capital. The old saying of never let a winner turn into a loser applies here. While we might decide to risk most or even all of our unrealized gains on the higher probability that the trend will eventually continue, we can't risk any of our trading capital on the lower probability but very real possibility that either the trend will not continue or it will only continue after our account is totally wiped out. If price does not turn around before our unrealized gains are depleted, then we are forced to exit to preserve trading capital.

Different traders will handle this situation differently and most with a lot of experience have been through it several times. If they haven't been wiped out by now, they have found a way to preserve their trading capital and perhaps some of their unrealized gains when the turn inevitably occurs. I can't speak to others methods, but mine is to realize gains in bites as I go, so that in the rare case of a major long term reversal, most of my gains have already been cashed into my trading capital and are no longer at risk. Once I'm deep into a profitable trend trade, I will never let my trading capital be placed at risk. Although current unrealized gains may be at risk, they usually represent a small portion of the total gains I have made on the trade. That's my plan and it works for me.

If you don't like my plan, that's fine, but you do need a plan to protect your trading capital before this situation occurs. It's not enough to think you will formulate a plan if and when it occurs. That might very well be too late. Eventually every trader will have to face this situation and bad decisions by traders in the heat of battle are legendary. Jesse Livermore, the famous stock trader, had made $100 million by 1929 trading stocks, and had lost it all by 1934. The loss of his fortune was Jesse's final lesson to us and we shouldn't let it go to waste.

That completes the first section of Expert Exits-1) The trade is losing. The next section will be Expert Exits-2) The trade is winning. That should be a bit more upbeat, but I think we have lots to discuss before I dive into it. Best success to all.

G

Hi G,

OK, now we are talking because this is exactly what I am facing with UJ at this time. I had previously banked some nice pips and am left with 3 positions, spaced 100 pips apart, that are beginning to fade. At one time they had been up close to 500 pips, but at this moment they are down to +320. Momentum is fading, but so far the Pull Back is not very remarkable and is still above the rising 5EMA. I have my SL set at BE which is now about 100 pips below. My inclination is to let this Floating Profit fall to BE and anticipate that if momentum returns, I will try to rejoin the main Trend.

The main Trend is too powerful for me to consider a Counter trend play at this time though my BE position is in effect a Hedge.

You must be looking at something similar. Have you bailed on some or all yet, or are you going to try to ride it out?

Best, AG

I bailed with my profits. I think the odds still favor the trend continuing to between 119 and 120, but I will be away from the computer for most of at least the next three days. Once all the weak traders are shaken out of the trade, the stronger buyers should step in and restart the trend. I do think the BOJ will ease up on the QE soon, as we are pulling into the 12 year high range as seen on the monthly of 117 to 123. So the very middle of that range is 120 and that big round number is scary. The BOJ has never been known for it's trading sophistication. It wouldn't surprise me at all if they picked a big round number as their goal.

G

Thanks, I think that I will let mine go overnite but not the weekend. Easy for me because I am on Demo. I will probably not look to add another at 119 just yet pending the flow of Price and momentum. This Trend is in need of some correction, but has been so strong that it could still go longer. I mean just look at the S&P.

Have a good night and next few days, AG

I have 8 trades on this pair since 7/11 and when each gets to +200 I close half the position and ride the rest using a 2 day low as a moving SL. I also look for a massive candle closed as per G's suggestion earlier in the thread. So far I am up over 2000p still open on this pair alone. Been a good month so far considering how bad last month was.

awesome read ! keep it coming G!

im looking at UJ for a entry at around 117.04 level. will that be a good entry area?

As with my reply to Buk earlier, I don't think this is relevant to this discussion. I'm sure there are other areas/threads where this question would be more appropriate.

I would prefer to just continue with the way the thread is going at the moment.