How Long to Stay in a Trade?
Patience or Process?
Can Process lead to staying with Patience in the Trade?
Answer to you by the end of the post.
Early Exits out of fear and Impatience comes from Ignorance and Uncertainty of how much to Stay in a Trade!
With CCI we have a process that answers and provides a solution.
Staying in the Trade is decided by CCI 34 5min and with the strength assessment of momentum provided by CCI 34 30min. Both together are variables for either Staying in the Trade or defining the Exit Strategy.
So in a way we are now touching Exit Strategies.
In our CCI Multi Time Frame Window the Blue CCI line is CCI 34 5min.
Cardinal Rule to Stay in Trade for CCI 34 5min:
Buy Hold/Long till CCI 34 5min remain above -60
Sell Hold/Short till CCI 34 5min remains below 60.
Strength of assessment of Momentum is as usual must follow based on CCI 34 30min staying above 110 or below -110 for Long or Short respectively.
Both together give us Conditions to Stay in Trade as below:
Buy/Long
When CCI 34 5min drops below -60 but CCI 34 30min is above 110 no need to Exit instead continue to stay in trade till both concurrently go below -60 and 110 respectively i.e. Exit Strategy for Buy/Longs.
Sell/Short
When CCI 34 5min climbs above 60 but CCI 34 30min is below -110 no need to Exit instead continue to stay in trade till both concurrently climb above 60 and -110 respectively i.e. Exit Strategy for Sell/Shorts.
CCI 34 5min is Instrumental in our Exit Strategies backed with concurrent confirmation of loss in momentum by CCI 34 30min either moving below or above 110 or -100 in Long & Short Trades respectively.
Let’s take a Case Study Chart as below.
As the events have occurred:
Breakout below Open Range with consecutive strength star marked candles with CCI 34 30min < -100 provides with the Breakout Momentum Trade @ 1464
At the same time CCI 34 5min the determinant of our Exit Strategy and Staying in the Trade too moves below -100.
The fall in price continues till CCI 8 5min spurts above -135 providing us with a Pull Back second Short entry for Pyramiding as concurrently CCI 34 30min remains below -110.
Even with this, CCI 34 5min hasn’t moved above 60. Hence it never was the need to Book Profits or Exit form the trade.
As would follow price declined with close and low for the day been same.
Let’s review two more charts where when had to act to Exit.
Prior to that let me remind that a Trigger to Exit does not mean instantaneous Exit. It’s only a decision to pack our bags. The Moment to close the trade is governed by CCI 8 5min with its rule:
Buy when CCI 8 5m<-135 provided CCI 34 30min >110
Sell when CCI 8 5min > 135 provided CCI 34 30min <-110.
For Exit the Action Moment is when:
Exiting a Buy Trade
When the Buy trade turns suspect, one needs an Exit
What is bought earlier has to be sold.
And the Rule for Sell is CCI 8 5min > 135 provided CCI 34 30min is < -110
Case Study
Events from the left to right are:
First a Momentum Breakout to Enter Buy Trade
When CCI 8 5m < -135 occurs at 534 bought on Pullback.
However, price kept sideways till CCI 34 5min fell below -60 concurrently even CCI 34 30min moved below 110.
That was a Signal to Exit the Trade.
What was bought earlier had to be sold.
And the Rule for Sell is CCI 34 5m >135 provided CCI 34 30min stays below -110.
When next CCI 8 5m > 135 moment occurred at that point :
CCI 8 5 min .. 137
CCI 34 30min ..106.65
CCI 34 5min .. 101.85
While we waited to Exit as per CCI 8 5m > 135 to our advantage CCI 34 5min turned bullish with value 101.85.
So Exit plan gets cancelled.
Exiting a Sell Trade
When the Sell trade turns suspect, one needs an Exit.
What is sold earlier has to be bought.
And the Rule for Buy is CCI 8 5m <-135 provided CCI 34 30min is > 110
Case Study
Events from the left to right are:
First a Momentum Breakout to Enter Sell Trade
When CCI 8 5m > 135 occurs at 6614 short sold on Pullback.
However prices kept appreciating till CCI 34 5m moves above 60 concurrently even CCI 34 30min moved above -110.
That was a Signal to Exit the Trade.
What was sold earlier had to be bought.
And the Rule for Buy is CCI 8 5m <-135 provided CCI 34 30min is > 110
So we waited for next 13 candles i.e. near an hour for CCI 8 5m to moves below -135 and when that happened concurrently CCI 34 30min below -110 and we managed to Exit at 6622.
If we would have exited at first signal we would have exited at 6635 but by following CCI 8 5m Buy Rule we saved a few and bought at 6622.
There after it offered another Exit at 6605 just for academic interest.
We come to the end of the post.
Exit strategies can reduce a good amount of losses if the method is followed.
As a when over the next few days would add a more cases depending among queries to this post.
We move here on to Reversals. A subject discussed through tweets but no write up as a blog post.
DISCIPLINE RESTRAIN
Leave a Reply