Trade Exit

Beginner Questions
1

I’m wondering what to do to set-up your trade exit as you can maximise your trades.

The idea of letting your winners run, now thats easy to do if your watching the trade, but if your not available (as i tend to be sleeping when most of my trades get executed and i don’t intend to be up @ 3:00 AM every night for the london session).

As I’m not a greedy guy, depending on which pair I’m trading I set a reasonable TP (typically based off the previous days highs/lows), and am not looking for the home run but I when I’m right I seem to be leaving alot of pips in the trade.

I have been trying out a higher TP level with a trailing stop, but my PC always has to be on with the prog running in order for the TS to remain in place. So you know, what happens when the power goes out, or the PC dies or what ever… I don’t feel to comfortable with that.

Ideas, comments, suggestions??

Thanks

2

I just fibonnaci levels in the markets and then place OCO orders in my trading platform so I can shut the PC off, and i’ll either get taken out for the win, or for a loss or breakeven…

3

Don’t worry about your PC, the order should be executed at the server ! You can power it down when you sleep as soon as you have set your orders (at least with my broker, they told it to me, but it seems logical that for every broker, the various orders are executed at their server, not in your PC).

This being said, I don’t like automatic trailing stops, they are too mechanical, and they can lead to your trade being cut just on an temporary oscillation. They ignore previous highs and lows, Bollinger bands, etc.

I like using stochastics on a 60 minutes chart to exit a trade : usually it is quite reliable to signal a trend reversal, but this needs that you are not in bed at this time !

Another way to set your stop while you are sleeping is to use the Bollinger bands (on the winning side of the trade if possible), on a 5 minutes chart, or, if you are lucky enough to catch it, on a 15 or a 60 minutes chart, which is even better.

And also, if you can, before going to sleep, you can close half of your trade (meaning for example taking gain on 20 k if you have a 40 k trade), when you have : floating gain > 2 x (stop - trade). This covers any loss you might have on the second half if it comes back to your stop. Moreover, after taking this half of your gain, you can see whether you can reasonnably move your stop closer to your trade, or even protect your trade by setting the stop on the winning side of it, should it be only 1 pip above or under (depending whether you’re in a long or a short trade) from the trade ; Bollinger bands are a good indicator to set your new stop at this moment. This way, you are sure not to loose money when you sleep. At the worst you will have one half of your gain before going to bed + 1 pip. But be sure that your broker don’t allow slippage from the value of the stop at the closing of trades, otherwise you might encurr loses anyway.

P.S. : You say that your PC has to be running for your stop to remain in place ? This seems very strange ! Perhaps you should give a call to your broker to ask them how it works. Logically, the orders should be stored and executed from their server.

4

Attention: Trailing Stop works in the client terminal, not in the server (like Stop Loss or Take Profit). This is why it will not work, unlike the above orders, if the terminal is off. In this case, only the Stop Loss level will trigger that has been set by trailing stop.

Straight from IBFX… so my PC always has to be on for it to work

5

Most brokers have this information stored on their servers. you might want to look around for another one.

6

With Metatrader 4 in order to have an automatic trailing stop order, the program has to be running. These stops are executed via a command from Metatrader itself when the stop is moved or hit. Fixed stops and take profits are set on the broker’s server.

7

I second this 100%, not only does it solve your PC problem, but it’s also based on some very sound technical analysis. It’s just good practice to know where you are getting out of the market, so setting some targets and stops is just the next logical step.

8

I am a little embarrassed with Fibonacci levels. Where to consider them ? On daily, hourly, etc., charts ? It seems to me that you can find a Fibonacci almost everywhere.

Moreover, the charting packages I know give the Fibonacci retracements (which I have used, for example, to [B]enter[/B] trades on the USD/CAD one or two months ago), but they don’t give the Fibonacci extensions.

Could you give some more details on how you use the Fibonacci levels for placing your stops ?

Thanks.

P.S. : About what I wrote in my post below, taking half of my gain and protecting my positions before going to sleep, I must say that I am French, so it is easier for me to catch both the London and the New-York sessions. Besides that, I am a real night-owl, so that it doesn’t bother me to wait until my gain on a position has reached a certain level before going to sleep !

I can imagine that’s a different matter when you live in New-York, or even worse, in California. I wonder how do the Asians to trade efficiently ?

9

First thing you have to understand is that the power of the fibonacci levels isn’t to do with the magical natural power of the ratios, it’s just that a lot of traders, especially the professional ones with big money are watching these levels and set targets based on them.

I would say they most helpful on daily charts, with some use on hourly. They may have use on the lower timeframes but “big money” a.k.a institutional traders aren’t watching these timeframes as much so they lose their power here.

The key misconception out there I believe is that you have to re-draw the fibonacci everytime the market starts moving in a different direction, but really your best bet is to draw the retracement from a MAJOR trend, and the fibonacci levels can maintain their technical signals even as the market bounces around a bit. I added a EURUSD daily chart to give an example of the fibonacci I was using over the past few months (till it broke out over all time highs in early march). Keep in mind this is a very long-term outlook, I could easily apply a fibonacci retracement to some of those intermediate trends, if my outlook was more shorterm.

I don’t really use the fibonacci extensions, but rather the 1.618 “retracement” level. If that’s kinda confusing, I don’t blame you. But basically you are using the recent downtrend let’s say to predict a target on the current uptrend. I’ll post a picture of that if you want.

My aim is to emulate the professional traders, and from what I’ve read, this is the most common use for fibonacci, hope it helps!

Oh, about stops. I normally set them just below support of the 1st fibonacci level the price would get to if the trade went against me, unless there was another fibonacci level that offered more convincing support (ie. it has bounced off that level recently). Altho I use areas of consolidation in conjunction with fibonacci, so this is just a piece of the pie. It just so happens that consolidation usually happens around fibonacci levels! Sorry I missed your question on the 1st version of this post d’oh!

10

Thanks for your explanations. I will read and reread them carefully.

But the chart you give is not visible. I don’t know whether it is my browser or you didn’t attach it properly ?

Could you be so kind to check for that, I much prefer graphics to support explanations.

Thanks a lot.

P.S. : This time I got the picture, it’s OK. It should have been my browser…