[jonbig04]

Awesome post Atto. Make sense in every way.

[BlowFish]

Hi Atto,

Great thread, mind you its always nice to see a post about the nuts and bolts of a trade. I know its about exits but just for completeness could you post a brief post with your entry? It gives us some context for the trade management. Also maybe an idea of your initial stop loss criteria? I hope you don't mind me asking.....you clearly have already put a lot of work into the charts you have posted to date.

Are there circumstances you will close all of the remaining position? (e.g. This is a really big selling climax and there is a case for minor support here maybe I should stand aside and re-evaluate).

Nice trade btw, hope you manage to post a few more. I'd be interesting to see how things pan out when price dosen't stair step in a strong well defined trend, I guess you take your profit on the first leg(s), get stopped on the rest, and look for the next trade

[firewalker]

First of all, thanks atto for providing so much insight in your trading approach. It's been a pleasure to talk with you in the chatroom exchanging live trades. So everything I say here is only to illustrate that there are different ways to skin a cat. I'm not saying this or that method is better, we all need to trade the way we see fit.

The second thing I'd like to say is well done on getting your short entry near the HOD. I was actually long (potential support in the area 981-983 and we still had the rising demandline on the 15min, one that I already refered to earlier in this thread). So this is the context:



My long was scaled out when we failed to make a new high at 988 and another scale out and the rest breakeven. The red dot shows where I shorted and zoom in to the 5minute to see clearer:

Originally Posted by atto »

Here is this morning's trendy price action on a ES 1m, with annotated climaxes (which were the primary exits for my trading today).

The problem with volume climaxes is that there are a lot of them. I (try to) wait for a climax near some important support level before scaling out. I've learnt that the midpoint of a range can also create a retracement, and - depending on how far we moved already - it's one I don't always want to sit through so I scale out.

I agree that climaxes often lead to small swings in the opposite direction, but - and I realize many will disagree - I prefer to have a chance of catching the 'big swing' from time to time, by waiting for a reaction at a more important pricelevel.

In this particular example, it means stepping back the the sub 1min TF and having your eye on the next potential support (which I had around 961-963).

It does not mean you need to give back all of your profits. Stop placement is shown on the chart below:

My first exit was when price accelerated on the way down and climaxed. Although volume is not on this chart, you can see that momentum was higher and the spread was widening. The second scale out point was a bit further down the road.

Originally Posted by atto »

I'm much happier to go to lunch and re-enter later.

And that's where I guess it comes down to styles, personalities,... I prefer to ride my trade out till EOD with whatever part of my position I have left. The way I see it, looking for a new entry means putting on new risk, and the potential of giving back profits made earlier.

Let's zoom back to the 15-min chart:



We broke the demandline and that's why the odds were a bigger move was coming. Thinking of trading behaviour, you were very early with shorting, I was a bit later (waiting for the break), but all those trading higher timeframes were even much later. Hence my belief that sellers would propel price further down, at least until the next support level. And as it turned out, we even went further down another 10 points in the last thirty minutes.

[atto]

First, let me thank those of you who have contributed your ideas towards exits. I don't favor "mechanical" stops (scale outs at different predesignated levels), because this doesn't adapt for different market conditions. Determining the strength of waves (as Db said) allows you to take advantage of trendy and congesting environments. However, it's not nearly as easy as taking stops at 10, 20, 30 pts, etc, so this may have something to do with trading maturity. I treat my exits very importantly, so took the time to make a trading plan for exactly what I look for.

Originally Posted by Kiwi »

I had only one real issue with atto's excellent original post and it was his mention of the phantom of the pits "if the trade isn't proving right, get out" approach.

Yes, good point Kiwi. I am much more willing to exit, sideline, and re-enter than give a move "more room". I'm of the belief that my greatest edge is right at my entry, so my stops are typically pretty small. Given, my specific strategy is designed around this fact. Depending on the volatility environment, this is generally around 1.5 ES. However, I don't hit my stop very often because I generally exit before it gets there. I do admit that having such a small stop involves being able to gauge buying/selling interest very quickly on a fast chart (I use a 3-10s chart), and I'm very willing to re-enter if I have to. I do admit that this strategy

Originally Posted by BlowFish »

... could you post a brief post with your entry?
... Are there circumstances you will close all of the remaining position? (e.g. This is a really big selling climax and there is a case for minor support here maybe I should stand aside and re-evaluate).

Picture attached. More information could probably be gleaned from the Cajas Famosas thread. As an aside, I do not take all breakouts like this, and this met other criteria (example: the bull failure at the double top).


Yes, at times, I will close an entire position at a significant climax at s/r. However, this is generally based on other factors, especially on higher timeframes.

[jonbig04]

I believe atto is absolutely right in that mechanical targets ideally will never be as profitable as PA based exits. However that is assuming that you are disciplined enough and proficient enough at reading PA to make them that much more profitable. So as a piker, I have mechanical targets because I simply cannot read PA well enough yet and since my targets are set multiples of my stop I maintain a very favorable R/R which I think will always net me a favorable amount of points at the end of the week, albeit never as much as I could have with well placed PA based exits.

[SunTrader]

I wouldn't exactly call them climaxes since the trend continued lower and then lower still.

And as for the original example where there was a pullback on lower volume before it went to the eventual high and then broke lower - lower volume on a pullback can also represent lack of sellers if the trend continues much higher. Only if there is a top soon after can it be determined that it was more a lack of buyers that caused volume totals to be dropping.

Other confirming factors are needed then.

[atto]

Originally Posted by SunTrader »

I wouldn't exactly call them climaxes since the trend continued lower and then lower still.

That would simply be semantics then. Since we don't know if the trend will continue, they are very good scale out places (since, as you see, there frequently is a pullback after). It defeats the purpose to notice a "potential climax", and wait for the trend to completely change before exiting (waiting for "reversal confirmation"). As I said earlier, my strategy involves position adds, so I do account for continuing trends.

Originally Posted by SunTrader »

And as for the original example where there was a pullback on lower volume before it went to the eventual high and then broke lower - lower volume on a pullback can also represent lack of sellers if the trend continues much higher. Only if there is a top soon after can it be determined that it was more a lack of buyers that caused volume totals to be dropping.

Sure, it's actually a mixture of both. Neither party was particularly interested, but this is what I was referring to: my edge is decreased with significant lack of enthusiasm of buyers. This doesn't necessarily mean there will be a top, just like climaxes don't mean a top/bottom.

[DbPhoenix]

A Wyckoff trader will find it helpful to distinguish between "climaxes" and "climactic action". Climactic action may, of course, result in a climax, but one can't know whether or not there is in fact a climax until it's been tested, and by then the trade may be gone, depending on where the trader prefers to enter.

Second, watching the bars form in real time, or via playback using 1x real time, is very different from reviewing a static chart. Developing a sensitivity for climactic action is much easier when watching price move. Without that, one can easily form judgements based on insufficient experience.

Third, if there is a "lack" of sellers, price will rise, not fall. If there is a "lack" of buyers, price will fall, not rise. If one waits for "confirming signals", the trade is most likely gone. One of the chief advantages of trading using Wyckoff's approach is that one needn't bother with a lot of confirmation.