Trade Aptitude
Quick Tip: Novel Exits Part 2
Yesterday I shared the idea that a good exit may be an opposing signal from a different strategy that you use and know has edge. Reprinted here in italics.
Let’s say you’re profitably long using a trend strategy and your reversal strategy is signaling short. You have choices, which is better than none.
1. Ignore the reversal signal.
2. Exit your entire position.
3. Scale out of your position.
Scaling out is a good choice. You’re banking profit and staying in the primary trend. The key is selecting the strategies you’re using. They all need "edge."
One of our trading team members offered further choices that expand this, and I wanted to share them with you while the idea is fresh in your mind.
4. Exit (or scale out) at the reversal signal, anticipating re-entering wholly or partially on a pullback. After all, you expect a reaction to the reversal signal, and this way you're trading both - kind of eating your cake and having it too.
5. Move your stop up very closely, expecting it to kick you out on that tightened stop. If price should ignore your reversal signal (as can happen) you're still in the trade. But again, you expect a reaction to the reversal signal, so waiting for a significant pullback to your original stop (or breakeven or adjusted stop) is almost irresponsible.
This is why trading with a team is so powerful. Synergy. Creativity. You simply learn more, faster.
If you missed the live trading event yesterday, or you simply want to review the recording for all the great lessons (and trades) shared, here’s the link. It’s only active through Sunday so get going!
Thursday’s Best S&P Turning Points Results: Neither trade triggered
Today’s Best S&P Turning Points (consider wider stops and less size in fast moving markets):
Short 4123.50 stop 4129.00. Buy 4039.75 stop 4034.25. These are the same as yesterday. Additional levels are far away. If either fails, the breakout is valid.
Globex View: Very narrow range hovering around yesterday’s close. Waiting on Employment numbers.
The World Sentiment Index: (+100/-100) PLUMMETS from +50 to -36 with most major world markets bearish, S&P futures flat. Historically price closes HIGHER than the open 56% of the time.
Catalysts: Employment Situation @ 8:30. THAT is IT.
Trade Fearlessly,
Mike Siewruk
P.S. Feel free to share this blog with all your trading buddies.