Trading Price 7: Exit Tactics Flashcards
what is a Fixed Exit
A fixed Exit or Target is a specific price you will exit the trade
6 Types of Fixed Exits
- Target 1 only at Supply or Deman Zones 2. scale out - have multiple targets 3. set & forget 4. Exit at a specific $ amount 5. Exit at a specific % amount 6. Exit at specific Reward to Ratio amount
Fixed Exits 1. Target 1 only 1 benefits and 2 drawbacks
Just have 1 exit target. Benefit: will profit if hit target Drawbacks: - if only 1 target, then have to wait to get to target 1 to make profit -May be stopped out
Fixed Exits 2. Scaling out 1 advantage 3 things ryan wakins does
Get out at Multiple Targets Advantage: - if have 2 or more, can get out at target 1 half way, and let the 2nd or more targets run to next targets. - break even is a high probability. *** what Ryan Watkins does - puts 1/2 of shares at 1st target at 1:1 with stop. then wlll let 2nd 1/2 of shares run and do a technical stop - if target 1 hits, but target two stops out, worst case scenario is break even - even though target 1 is met, will not move stop.
Fixed Exits 3. Set and Forget 1 benefit
Set Trade up and don’t touch - people who use set and forget will often outperform those who sit in front of computer. not in front of computer to screw trade up.
Fixed Exits 4. Exit at specific $ amount what type of trader uses
For Paycheck traders
Fixed Exits 5. Exit at specific % amount what type of trader uses
For paycheck traders
Fixed Exits 6. Exit at specific Reward to Ratio amount
2:1, 3:1, etc.
what is Adaptive Exits and purpose
A trade that adapts to market conditions. The purpose of this is to let profits run as well as, use a more effective exits tactic as markets change.
5 Types of Adaptive Exits
- technical stop -watkins favorite #2 2. Moving Average 3. Trend lines 4. Ballistic - watkins favorite #1 5. ATR, $, % Trailing stop
Adaptive Exits 1. Technical Stops 2 advantages 2 rules
advantages: consistent good profit potential Rules 1. after entry, put initial stop under nearest Demand/Supply 2. After a NEWHH/LL has been made, move stop undernewly formed HL/LH - HH is not made UNTIL price moves past previous HH. Then move STOP.
Adaptive Exits 2. Moving Averages 1 disadvantage
- Exit when price CLOSES below MA, not when wick goes below Disadvantage: - may be out of trade faster than Technical stop
Adaptive Exits 3. Trend lines
use trend lines as exit points
Adaptive Exits 4. Ballistic 1 disadvantage 1 advantage 5 step process
disadvantage: does not happen as often advantage when it does, it is outstanding 1. want to see Several HL candles (minimum 3-5) 2. At least 1 must be an ERC 3. Track the last HL 4. Once price trades below the last HL, then exit position. 5. Do not wait for the close!
Adaptive Exits 5. ATR, %$, Trailing stops
use trailing stops as exit points
Combination Exits
- Used Fixed exit for 1st half: 2. Use Adaptive Exit for 2nd Half example: 1.cover half before D/S Zone 2. cover 2nd half when goes past MA
what time frame should you manage your trades on?
Intermediate timeframe
Combo exit example
- fixed target at demand zone 2. use technical stops until get to target or use 1 and 2 with different adaptive
what exit tactic to use at all time highs?
technical stop
3 considerations when planning exit
- make sure you have a CLEAR and PLANNED target exits 2. make sure your target represents at least a 2:1 R 3. Exit BEFORE the competitive buying and selling begins (just before opposing supply and demand levels)
exit tacticswhat to do at 1:1?in intra day, when book 50%?in swing, when book 50%?
- at 1:1 make stop break even2. for intra day, book 50% at 2:13. for swing, book 50% at 3:1
