Thanks, PanchoVilla,
That surely is the key benefit of a good forum discussion. That people can share thoughts and opinions. It is not a matter of having to agree or disagree, it is purely about raising issues, and considerations relating to those issues, that provoke thinking also among other traders about their own trading. It may raise points that have never been thought about before or other angles on issues that one previous thought were straightforward - and out of the confusion arises a more perceptive being!
I am actually in two minds over many of these issues. On one hand, I stick rigidly to what my charts are telling me because they are telling me what the [I]majority [/I]of active traders are currently doing - that, afterall, is why I [I]have [/I]charts, I don’t want to go against the majority just because my personal view might be different! [I]Having [/I]a view and [I]trading [/I]a view are very different matters!
But, on the other hand, (sometimes I think I must have about five hands!) I do not want to put my brain in a hat box on top of the wardrobe and be a slave to a bunch of lines on a chart. I [I]like [/I]thinking about my trades and I [I]like [/I]to have an understanding of what is going on in my markets. Otherwise it is (for me) so boring just to watch a chart that does not talk to me.
But, again, I find this fraught with contrary issues. If, as everyone seems to agree, one should consider all foreseeable factors before [I]entering [/I]the trade, which I assume also includes non-analytical issues, then why should it be wrong to bring into the picture unforeseen issues when they later appear whilst the trade is still open, i.e. when exiting trades? If “all things” is ok for entries then it should also be ok for exits, too?
But, but, but, if one mixes up personal opinion and technical analysis too freely then there is a tendency to even try to “outsmart” one’s own technical model and pre-empt signals even before they are formed. However, as PanchoVilla has already wisely said, it is important to evaluate entry signals and only take the optimum setups - but [I]how [/I]can you do that without a process of discretional appraisal? and if you accept discretional appraisal for entries, why would you wish to deny it for exits?
One example of such a process is visible in Crude Oil right now. The bulk of professional opinion is negative on prices, but the charts continue to give a continuous supply of up and down signals in line with the various bullish/bearish releases. However, if one assesses how the market actually responds ( or doesn’t) to these releases, it is possible to assess how strong the underying sentiment really is in either direction. I.e. if a potentially strongly bullish release does not create any enthusiastic trade response then one can assume the bearish view is dominant. This means one can exercise greater caution with a buy set-up than with a sell set-up and either ignore it totally, or adjust profit targets prudently.
But a truly systematic chart trader will argue that this is totally irrelevant and unnecessary because the system itself accounts for this in its design which produces a profit over the long term in spite of these specific trade matters that only affect one specific trade at a time!
The core principle is that there is no right or wrong with these kinds of topics, there is only a matter of being aware of the pros and cons of each and deciding which of many approaches fits one’s personality, objectives, time constraints, capital constraints, etc.
I don’t lie in either camp 100%. I think, like with most things in life, compromise (and moderation, but that is another issue) is usually the best overall solution, and according to circumstances - and generally not to let rigid rules override obvious commonsense just because they are rules.
Regarding exits, for example, if I am in danger of ramming into the back of the car in front which has just braked sharply, do I brake manually or close my eyes and rely on the car’s automatic emergency braking system to do it for me because that is what it is designed to do?