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You entered into a trade, and the price stall. Now what?
I know many of you have entered into position and expected a big move and instead market stall and price move tighter and tighter. Your stop is not hit, or any of your target is triggered. As historical data has shown, tighter price will lead to a break out.
What will you do? Do you just let price take you out by either hit your stop or target, or you exit after X number of bars?
To me, I think exit if price didn't go as expected is a wise solution, but I would like to hear other more traders to chip in and their reason for their decision.
Always protect your capital should be your first rule. Use a time limit, that is, if price does not move in the expected direction within 2 min. get out.
I would say it depends on your method. If usually your trades lasts for a while, you can wait for x bars before you decide to exit because your trade may be right but it's taking longer than usual. Number of x bars should be included in your plan based on your experience. If you are a quick entry and exit kind of trader like me then you shouldn't wait, you should exit as soon as possible.
I try to get out of the position, if possible at entry, and place a stop in the direction of my initial signal, if the breakout happens in the wanted direction, i am in the position i intended just a few ticks higher, if the signal was wrong, i did not loose.
If it breaks out just to my new stop and then turns against me, I have to work on my signal.....
You entered a position, because you expected a strong move in a direction.
But instead moving strongly in your direction the market stays in a tightening envelope.
So you have three possible plans of action.
a.) get out of the position and look for something else.
b.) keep the position and may be it breaks out in your direction or your stop gets hit and loose money.
or
initial suggestion
c.) you get out f the position and place a stop above the tightening envelope.
Advantage to a.) you still have a chance to make money
Advantage to b.) the chance that loose money is hopefully smaller, given that your initial entry signal should be good.
If my setup is made from some statistic and I see the time I'm in the trade is bigger than the average time per trade I usually took, I close for some ticks in my favor if I can.
Dosen't matter if after a bit the move starts again, stick with the rules of proper method is more important, I will have other occasions.
First I never expect anything when I pull the trigger because I have no control over what happens next and then Im never disappointed either . I do want to win but just dont expect anything . Then my stop is always out of the way to give it room to breathe . Then its a function of your analysis of your instrument so you have an idea of how it usually behaves , does it regularly capitulate ? does news tend to throw it around ? I know CL can thrash around so bailing when it stalls is a good idea but typically consolidation after a breakout leads to continuation in the breakouts direction . See patterns like rectangles or bollinger squeeze .
Good question To me, depends entirely upon the particular strategy. For instance, if it is a momentum play and it stalls, then I scratch the trade a.s.a.p. whereas if it is a market fade based on volume exhaustion, then I may stay in for the sideways movement until the dynamics change.
To me, depends entirely upon the particular strategy. For instance, if it is a