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Wednesday’s Results: Neither suggested level triggered.
Quick Tip: Optimizing Exits
Stops are so easy. Pick your risk number. That gives you position size. Hit enter.
Profit targets are elusive. The Trading Gods made it that way, I think. And it gets worse if you’re a day trader and watching the chart!
If you ask yourself what would be the best stat to know when you enter a trade, eventually you’ll come to the answer that matters… how far in my direction will it go? This is called Maximum Favorable Excursion (MFE). We’ll never know this when we enter a trade but we can use probabilities from prior MFE to help our target placement.
Here’s how: Based on your rules for entry and exit, log the MFE for every trade starting today. You should do this for every trade setup your strategy presents, whether you took the trade or not. If you can go back and add this data to prior trades, spend the whole weekend doing it.
Once you have a sizable dataset (at least 100, the more the better) it’s simple to figure out the probabilities. For example, in the Trend strategy we trade, a 4-point target fills 75% of the time for the S&P. Seems like a great target to use for scaling out, doesn’t it?
Today’s Best S&P Turning Points (in fast moving markets consider a wider stop and less size):
Sell 4014.75 stop 4020.25.
Buy 3908.50 stop 3903.75.
Trade Fearlessly,
Mike Siewruk
P.S. Our FREE “Ultimate Personalized Trade Plan” class is being updated with FAR MORE details focused on personalization. Join me for the LIVE debut on Thursday July 28 @ 7 PM ET. Only 100 seats are available, reserve yours now. Click here.
P.P.S. This is your only opportunity to attend for FREE. The tuition afterward will be $197.
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