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Are Exits more important than Entries?

Discussion in 'General Forex Talk' started by ITtrader, Jul 8, 2011.

  1. ITtrader

    ITtrader intellitraders representative

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    One of the biggest questions that I keep asking myself is, are exits more important than my entries? I feel the answer to this question is yes they are. Overall does not do you any good if you are constantly breaking even on all of your profits and losses.

    If you are unable to get out of a trade at a reasonable price your losses will always be too high cutting into your profits. This is what sets the professionals off from the rest, their exit strategies. This is more than just a money management plan. Exits are just as strategic as your entries. Exiting a trade can be determined on so many factors, S/R, BB, News, Trends, and so much more.

    It not so much about winning on huge trades it is about losing a little on the trades you lose. Like golf, the one who wins is who misses it the closest.

    [​IMG]
     
  2. Matt Miller

    Matt Miller Recruit

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    In my experience (I'm entirely self taught, so this is just what has been working for me), it depends what currency pair I'm trading.

    For example the EUR/USD fluctuates so wildly at times that holding onto a loss in hopes it will turn around will wipe out a newbies account faster than they can imagine.

    On the other hand, something like gold or USD/CHF which has followed a trend for a long period of time can usually be held onto, albeit longer than desirable, to avoid losing too much money. I wouldn't say its more important than entries, but I would say exits are far more overlooked and deserve more attention to be paid to them, and my personal opinion is that overly optimistic traders who don't understand that you will win some and lose some are the ones who give Forex traders a bad name, and have brought upon us these new horrible regulations. If you look at my statements about 30% of my trades are losses, sure I've kicked myself because trends have turned around shortly after closing a negative position, but I've learned to tolerate it because I never let them get too out of hand.
     
  3. ITtrader

    ITtrader intellitraders representative

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    @Matt, I really agree with what you are saying. I think that there have been too many new traders just depositing the minimum and trying to gamble on a huge trade. I have, like you, accepted the fact that I am not going to win every trade but if I can control my losses then I will be profitable. Still learning how to do this so any advice you have would be appreciated.
     
  4. D-Trader

    D-Trader Private, 1st Class

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    There is no reasonable price, so there is no way out of trade. Find reasonable price which will give you the key to out of trade.

    D-Trader
     
  5. Matt Miller

    Matt Miller Recruit

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    One of the hardest things you'll have to learn as a trader, whether it be forex, stocks, commodities, indexes etc is how to take your emotion out of it. More often than not, if you open a position in a volatile climate and end up 15+ pips in the hole on it, it'll be hard to recover and you just need to cut your losses and move on, because its better to spend time making other positive trades than waiting for an unexpected trend to correct itself in your favor. Each currency pair is different though, like I said, I may let the USD/CHF slide a little further than most because it has such a linear and predictable trend. Also, I never try to predict where a trend will end, I'm fine with jumping into a trend half way through it rather than guessing where the support or resistance will be and losing money on it.

    You will find and develop your own strategies that work if you practice long enough. I probably execute about 20x more practice trades than real ones just versing myself in the movements of the market and figuring out what works.

    Also, just another thing thats worked for me to some degree, forexpros.com and other similar websites usually have some good technical data that will help you better predict if its a good idea to leave or hold onto your open positions, as well as a lot of user sentiments which I don't necessarily refer to a whole lot, but if you see a pair getting a lot of attention it could mean easy money.
     
  6. The Prophet

    The Prophet Private

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    Mastering the Exit

    The exit is where your trading system tells you it is.

    If you do not know where your exit is, don't take the trade and have a good look at your trading system.

    If you do not have a trading system, stop trading and stop losing money. Trading really is simple, we make it difficult.

    The exit is the most emotional part of the trade. Remove the emotion out of the trade, trade every trade with the same discipline i.e. price entry, stop loss, manage the trade and take profit as your system shows you.

    If you trade every trade with the same discipline, you will be a successful trader.

    Always remember:
    Emotion = loss
    Discipline = Profit
     
  7. WaveRider

    WaveRider Sergeant

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    Every institutional trader has an SL what about us?

    It seems neither SL or entry is more important. They each make half of a good trade. Together it is a whole trade.

    When you analyze a trade you look for trends, S/R, channels, retracements, pivot points, etc. and at these decision levels you make a decision. If the price doesn't respect the S/R level and move how you hoped, your decision is now invalid. At some point, the price will tell you it isn't going your way anymore. That's where the SL goes. It isn't a percentage or risk reward ratio. Those are arbitrary numbers that don't look at price. Price got you in, price gets you out. An intelligently placed SL that is hit is a success, not a failure. It did what it was supposed to do. Stupidly, randomly placed SL aren't ever a success, just dumb luck.

    Arbitrary percentage or risk reward ratios can't work. If I can blindly make every trade in any direction with a 1:4 risk/reward ratio that wins 50/50, I am certain to be up 75% of the time and I can make an ea that makes a market order with the right ratio in any random direction and retire young. See, Forex is easy and institutional traders waste time drawing lines and reading news.:p

    Use some version of S/R to get in and some version of S/R to get out. It probably doesn't matter which as long as you're consistent.
     
    #7 WaveRider, Aug 12, 2011
    Last edited: Aug 12, 2011
  8. ChrisJMan

    ChrisJMan Recruit

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    I always find that one of the hardest parts of Forex trading for myself is to know when to get out. I find it very difficult to separate emotion from the trade, but am trying to teach myself that discipline.

    any advice?
     
  9. WaveRider

    WaveRider Sergeant

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    Doesn't sound like you really have a trading plan

    The markets have to turn around sometime. When to get out is a long debated subject.

    Joe Dinapoli's book gives good advise on exits and profit levels. Sive Morton's videos say right on them that he has been heavily influenced by Joe Dinapoli. They're basically fibonacci extensions in trends. I recommend reading it from cover to cover. It's not a holy grail system but it is really helpful. If Sive uses it, other institutional traders do too.

    informedtrades.com has a great youtube video series on chart patterns and what your target profit levels might be.

    Brett Steenbarger has a nice book and series of articles about getting your emotions under control in trading. He's a psych Ph.D and a trader.


    Moderator, I'm not affiliated with any of these sites, or any site for that matter. Is it okay to post urls?

    Moderation Note: The Community forums area discourages posting of urls, since spammers will try to hijack the most innocent threads. If you want to compare trading systems and educators, a thread in Company Comparions and Competitions would be a better place for posting urls.
     
  10. Pharaoh

    Pharaoh Colonel

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    If you are using MT4, tell it to show profit as points instead of as currency. It's easier to deal with numbers if you think of it as having gained or lost points instead of focusing on whether you are gaining or losing money.
     

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