Having trouble finding the right time to get out

[Teruki 21]

Hi,
I have been training on SIM for about a month. One of the biggest struggles I am having is deciding when/if to get out especially when the price action shows a sign of weakness before my target. What I have been experiencing is that if I "wait and see",  it often reverse back suddenly and often I get stopped out. If I decide to sell/cover everything at that point, then it comes back up and hit the target eventually and I end up not making the profit I could have made.  Of course sometimes it goes in my favor but I never know. The worst is when the price is close to the target and I am waiting to hit it, then there is a huge drop (or surge if short). Often times It is not down to my stop but down to half the target level for example and I don't know if I should get out at that point or not.  I do partial out but I never seem to know when is the right time to get out before the target. It is especially difficult with the ORB where price action is more volatile. 

Any advaise would be appreciated.

Thank you.

[Justin 264]

Hey Teruki,

You're definitely not alone in this struggle! Reading the price action and trying to figure out which way the price is going to go is definitely hard.

A more concrete trading plan will help you. Ideally you need to be going in with a plan, and the "wait and see" is the right approach. If you get stopped out, then that's fine because you went in knowing that could happen. But if you're right, you should be getting at least 2R out of the trade. That being said, even with a trading plan, you do need to use your judgement (that will come with more practice) and partial out even if it's not quite at the level you wanted. Personally I don't use preset orders that only trigger if a specific price is hit. Because, if something is a penny away and it reverses... then you know what a terrible feeling that is.

As you probably know, you need to use all the tools you have to your advantage on getting into a trade, but also to keep them in mind while you're in the trade if things aren't going quite as expected.

-How does the Level 2 look? Where is the supply and the demand. Do you see many offers on the ask that will pull your price to and above your target? (Thor's psychology video on L2 is great for this)
-Do you have any levels set from when you were planning your trade?
-Is there any prior indication that it will go to where you want (ie. Can it push back to a prior HOD/LOD)?
-Which way is the overall market trending? Keep the $SPY open.
-This is all definitely harder with ORBs as we only have the pre-market and previous days levels to go on (But again, Thor to the rescue with his latest video today!)

It's great you asked this because I just did a related exercise with my trading data. I recently slipped into a mindset where I'm partialling out too early, instead of sticking to my plan of taking my first partial at 2R. I looked at all my small wins where I partialed out way too early in full or subsequently got stopped out at break even. It's astronomical and a bit depressing how much more I would have made if I stuck with my plan! Sure some of my small green trades turned into full loss stop outs - but the other ones turned into huge wins.

Being new and only in the sim for a month, I might advise waiting past the volatile 5 minute ORBs. Look at VWAP bounces/breaks, ABCD, Double Bottoms. There are tons of great moves to be had after the first 5 minutes that still have good momentum but aren't as crazy to trade 🙂

[Abiel 475]

Hi Teruky.  If you read Andrew´s book every strategy has an exit point (usually a new 1 or 5 min low) but you will fine tune your entries and exits with time and experience. As Andrew says, commissions are cheap and you can get in again if your trade idea is still valid. 

Trading is more enjoyable and less stressful when you use rules and you trade mechanically: just follow your rules and  live with the fact that, no matter if the trade was a win or a lose, you did a good job following your rules. I know, easier said than done but I am sure that this is the way to a profitable trading career.

For example, for strong stocks in a clear trend, I use MAs for entries and exits, I place orders for taking partials, profit target and stop loss. Today I made my day with TWLO and left the remaining shares with a trailing stop to get out at 9 SMA in the 2 mins chart. As soon as the price hit the 9 SMA in 2 mins the stock began to make new 5 lows for 15 mins and then it went up again to $176.36. Could I have made more money? In hindsight, now watching the dead chart, yes. But in the market anything can happen so I follow my rules without regret. 

 

[Teruki 21]

Thank you Justin and Abiel.
I will fine tune my strategies and rules and try to stick to them.
 
Thank you again.
I really appreciate the time and effort you took for this.