The Daily Market Forecast... exits
Wednesday’s Blog Results: The suggested buy level ran for 22.75 points. How much did you keep?
Today’s Lesson: Exit alternatives.
The money is made in the exit, not the entry. That’s not to say you can randomly enter a market (although Market Wizard trader Linda Raschke was quoted as saying you could give her any entry and she’d optimize the result).
The long trade yesterday did have a “near perfect” entry. Buying at 4540 and seeing only 1 point of adverse move (all orders there were filled). It ran for 22.75 points before returning to the level and eventually hitting the stop. Depending on your exit rules this great entry could have been a small winner, solid winner, breakeven, or a loss.
Market conditions are important to guide you to your exit rules. Is price moving fast or slow? Is the expected range for the day wide or narrow? Is there a catalyst on the horizon that could impact price direction? Lots to consider.
Here’s some popular exit rules to consider after you’ve analyzed market conditions:
- Fixed profit target based on the strategy’s historical performance.
- Trailing stop loss equal to your initial risk.
- Chart features “to the left” that suggest a stall or reversal.
- Trailing stop based on price pivots.
- Opposing trade signal to reverse direction.
Which is best and in what market conditions? You’ll only know the answer if you document every trade with results from various exit strategies. Our team uses 3 different rule sets and adjusts the details during various market conditions. You should too.
Today’s Best S&P Futures Turning Points:
Short Level: Sell 4557 stop 4561.50 (or as far as 4562.75).
Long Level: Buy 4510 stop 4505.50 (or as far as 4503.75).
Trade well,
Mike Siewruk
P.S. Tired of trading alone? Need more quality setups? Learn how our team-based approach can accelerate your trading performance. Click here for FREE video training.