The Daily Market Forecast... orphans

Tuesday’s Results: The suggested short @ 4580.50 nailed the top of the day session and ran for 63.75 points to the close. How much did you get?

Quick Tip: Orphans.

Entry decisions are easy. Exits are tough. If you managed this trade you likely took profit before the end of the day.  There were two 15+ point corrections in the trend down. Watching that money leave your account is tough. Not getting the full move of 63.75 points is tough, too.

All-star trader Larry Williams, in his book Long-Term Secrets to Short-Term Trading, finds that his best trades are those exited at the close. He researched and tested all kinds of exit strategies to determine this. His advice: enter and walk away. Come back at the close.

Another great trader I know, Bob Dunn, would say something similar. His view is NOT to cap your wins but let them run. In fact, this is a common view from many great traders. Cap your losses and let your winners run.

The challenge is this: you’re reviewing trades and documenting results and you’ll see that many times you had significant open profit and lost it.

The solution could be this simple: scale out some contracts/shares (assuming you can trade multiples) to ensure profit but leave an “orphan position” until the close. With micro contracts available and liquid today, even the smallest of trading accounts can handle it.

Today’s Best S&P Futures Turning Points:

Short Level: Sell 4550.25 stop 4555.75.

Long Level: Buy 4470.50 stop 4465.50.  

P.S. If your strategies have proven edge and your results are poor then maybe you need to change your behavior. Click to learn how.