Tuesday, August 18, 2009

Sell UC +5

I was thinking this afternoon about what is the ideal exit point in a trade. I decided it was not at the best price. Of course I want to make as much as possible. But the problem is you have to let the MARKET TAKE YOU OUT in order to do that. How do I let the market take me out? I place a stop, I don't adjust it against my position and I swing for the fences. This inevitably leads to several more losses than if I were to get out at the first sign of weakness against the trade. But if a market retraces past the initial entry point and has not first at least touched the Keltners I would say it was in fact a good trade.


Because I live and die by the Keltner's. And after countless observations, it is well worth the waiting game to see how the market reacts to the band touch. If it bounces off it without hanging around, the market is decided. But if it lingers chances are it will continue in it's chosen path. Today my trade on GJ is just such a trade. It lingered, but it never broke, a good sign to exit.

Whereas on the UC trade I just exited, the market rejected the band level and we traded back to entry. Of course this does not guarantee I will exit  at the wrong time more often than not, but what it enables me to do is hit a rare home run. If I exited before the keltner touch, I do not even put myself in the game. Bad strategy. 

Let the market take me out, good strategy.

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