How to calculate a Exit Price....?

srisara · #1 22nd August 2005, 02:15 PM

Dear Seniors (Amit, Joy, Saint, Creameeee)

Once a trend has been identified, take for example, GardenSilk, Abishek Industries, how to calculate the Exit Price?

Its like this, you enter a trade after feeling a trend change (Break-Up) is going to happen.

Every day you keep your Trailing Stop Loss. All this is fine.

But I want to know is there any way or formula to calculate the Exit Price of the Break-Up?

Please input your ideas or experiences on this. As, this will help us to exit a trade with decent profits..

Satya

gvnarendra · #2 22nd August 2005, 03:46 PM

Look for previous resistance and supports. Or you can measure the possible next level with the help of fibonacci retracement lines.
gvnarendra

srisara · #3 22nd August 2005, 05:55 PM

thanks narendraa..... after a long time dude, i am seeing you here....

howz life...

Satya

swingtrader · #4 22nd August 2005, 06:50 PM

Here are the various exit strategies you can consider:

1. You could place a stop below previous/nearest support (previous pivot low). This would work for slow & steady trends but your stop would probably be too far away for parabolic moves like GARDENSILK.

2. Trail your stop based on the percentage of paper profits you are willing to lose. Example: If you entered GARDENSILK at 67, the highest high was 83.90 you have approx. Rs. 16.90 profit. You could then place a stop around 75.45 if you are willing to lose only 50% of your profits (today's low was actually very close to this stop, probably you would have got stopped out if you used this strategy). As the price moves up you can compute and trail the stop.

3. You could trail your stop using a 10-day exponential moving average of the lows. The moving average period will depend on how much of the profits you are willing to give away to let the winning trade ride.

4. Now here is my favorite exit strategy. You could trail your stop using a exit based on the average true range. Example: Currently the 10 day average true range of GARDENSILK is 5.38, you could trail the stop at the highest high (since you entered the trade) minus 3 times the average true range which would mean the current stop would be around 67.76 (83.90 minus 16.14). As the stock moves up you would recompute the ATR each day and adjust stop accordingly. The general recommentation is to select an ATR multiple between 2.7 & 3.4 (don't ask me why between values, I have no idea but have found that a value between those values works fine).

Hope this helps.

--SwingTrader

Saint · #5 22nd August 2005, 07:35 PM

Hi Srisara,
Can't get a better reply than that from Swingtrader.I am in GardenSilk myself from 61.Was taken as a short term trade.Had exitted two thirds at 79 and 81.My stop loss for that last position is at 71(the bottom of that last wide range bar up).This is for a short term trade.

If I were trading GARDEN SILK as a longer term trade,I would have taken 1/3-1/2 off the table(why?coz it ran up too much too fast for my liking,prefer to re-add when it pulls back),done nothing else but raise my stop loss to 54(why 54?coz that is now the previous pivot low on the weekly charts).If I am stopped out,this would still end up as a losing trade for me as I would be giving up all short term gains in anticipation of bigger gains.But that 's what long term trading is all about

.Once this pullback is over and this forms ahigher pivot low,then I simply raise the stop loss to that pivot,so on so forth.

Of course,there are many ways to set a stop loss.......just sharing with you what I do.

Happy Trading!!
Saint

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