What sort of TA features are traders’ favourite signals to exit a winning position?
(especially a trend-following trade with no obvious rational target exit price)
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A trailing stop will do what you want but you have to set it wide enough not to get triggered by pullbacks.
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Yes. In fact I always use trailing stops on trend-following trades. And obviously I always get out if the trend shows chart signs of stalling.
But a TSL often means giving up a chunk of profits to volatility and I’d like to get out on a better price. I wondered if anyone used any tips and hints to spot suitable levels.
You could use the same method you are using to know that you are in a trend to know when you are out of one again and make that your sell signal. You do not have to switch trends just “not be in one anymore”.
I know you’re not big on SR levels and patterns, but sometimes they can give you hints on the lower time frames, like the 4H:
Example - If price exits this channel and continues below one or two recent HL’s, then that could be a good signal to exit.
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Its something I’ve tried but I’d like to do better.
Obviously if my trend set-up weakens I can get out. Likewise, as I enter on the resumption of trend from a pull-back, I could exit the same trend on the same pull-back pattern. But in both cases this won’t be at the best price.
Hi, you can try to use, close transaction after time for example close transaction after 6 hours or indicators like ADX, RSI. Regards Greg
Thanks for these suggestions.
Initially I like the idea of RSI as an exit indicator. It looks like on the daily chart a RSI (Wilder) of about 8 would get ne out of favourable legs of a nice trend just before a pull-back, using breaches of the 70 and 30 value levels as an exit signal. If this works its exactly what I would love to have - an exit strategy that gets me out at the highest close in an uptrend, not a low close in a pull-back.
Unfortunately it’s seems the biggest stumbling block for traders,remembering when first starting on demo. would close a trade when a certain amount was reached as in money.Maybe naive but maybe not so flawed an idea after all
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Have you ever compared the volume bars on different platforms
Not done that. Working in forex mainly now, but I never had much faith in any volume figures.
i agree just imitate the candles really ,just curious
I’ve never seen the magic in volume - big candle, big volume; little candle, little volume. No help at all.
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oooo great question! my favorite is bollinger band candle closes couples with an osccilator
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it only helps if you know what to do with that data. volume is key
Also another great exit point is the average daily range of the asset. especially for intraday style. if lets say a major pair averages about 60 pips of a range and im trend trading ill set top for at least half of the average daily range up to 100 percent of the average. and then there is also exit ting at specific times of day. the majors its easy to time because when know new york session moves the most amount of volume in usd during that time. so exiting halfway or at the end of NY session is ideal
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Or I could just close a long position after two consecutive higher closes…
That’s a great idea. I’ve been looking at prices crossing past the 1st Std Dev of a Bollinger band. Never thought of combining it with an oscillator.
Hi @tommor,
I saw your post while reading some other stuff and thought I’d add a few thoughts.
I (and others, of course) have often spoken about exit strategy as one the most critically important components of any trading strategy. And yet it is one of the hardest to optimise. And there is a good reason for that: Every trend is unique in its duration, strength and extent - and they can be very different from each other whatever TF one uses.
I think there are three broad approaches to exiting:
- a fixed distance in pips
- capturing extreme high/lows in moves (e.g. bollinger bands, envelopes, FIb extensions, etc)
- a measure of exhaustion and reversal (e.g. trailing stops, fib retracements)
None of these individually will work all the time but a combination of 2 or 3 such categories can work well.
For example, with multiple positions, opened either simultaneously or via scaling, exiting could be handled with a combination of:
-
a partial amount with a fixed pip target set at a distance typically achieved on a particular TF following an entry signal (e.g. 30-50 pips). This helps cover the exposure on the remaining open positions.
-
and a further portion can target a spike or OB/OS where price reaches an extreme level determined by, say, bollinger bands, envelopes, RSI OB/OS, etc.
-
this then leaves the balance with no set target and is eventually exited on a trailing stop (either automated or manual).
A further alternative is to use multiple TFs to identify a reversal. If one is trading off a daily chart, then monitoring a set-up on a 4-hour or 1-hour chart can pinpoint trend weakness before it appears on the daily chart - and, in the same way, is also useful for providing new signals for re-entry.
I think the choice of exit techniques depends very much on the TF being used for trade entries. Trend trading on the daily (or longer) TFs usually means looking for longer, bigger moves and therefore offers more opportunities for varied combinations of exit approaches. But trading off, say, 1-hour charts and daytrading, in general offers a much narrower choice of exit strategies (e.g. trailing stops will usually give back most or all of any profit gained).
Just as an example, in my own case, I am a daytrader, I use only two techniques, 1) one fixed pip value for my target and another, related, pip value for stoploss, and 2) an envelope to catch extremes in moves. But neither of these are written in stone, rather they offer an initial setting which is then tweaked to account for possible S/R areas, recent high/lows, candles, etc.
I use exactly the same set-up on daily, 4-H and 1-H charts. The daily gives me the overall picture, the 4-H then tells me where we currently are in this overall picture (e.g. initial momentum, consolidation, exhaustion,- etc) these two tell me if I am generally looking to buy or sell. Then the 1-H chart gives me my entry signals.
Incidently, these same envelopes can also help avoid entering trades at extreme points as well as indicating exit areas! 
But these are just my thoughts on the topic. It is a very important issue for every trader. It is highly possible to achieve a high rate of entry success but still lose money. The entire issue of how much one makes from a winning trade is determined far more by where we get out than where we get in…
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Thanks for this really well thought through post.
I love the idea of blending two approaches for more certainty over an exit decision, something I must try out. Two valid tactics for a blended approach right now for exits would be either movement of RSI into extreme overbought or over-sold or two successive positive closes - whichever prints at the close. More study needed though.
Personally I would prefer to find a reliable tactic using the blended approach before I delve into a lower time-frame: my trades are D1 so I literally have time on my side when determining the next move and I’ve not found 4H or lower to make enough difference to change entry levels or entry timing much one way or tother.
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