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Knowing
when to exit a trade ..…before entering the trade, is critical
to trading success. Once in the trade, anxiety, fear, greed and
a host of other emotions can cloud your thinking, making pulling
the exit trigger correctly very difficult.
Most
articles and analysis deal with finding the right entry, leaving
exits out of the limelight. Compared to exits, entries are relativity
straight forward and emotionless. Exits are the hard part. To
be successful, you must determine your exit strategy before entering
the trade and stick to it.
STOPS
provides a wide array of exit tools, fully integrated with all
STOPS money management tools. Used in conjunction with Risk
Control, STOPS provides comprehensive exit strategies for
all market conditions.
STOPS
is different than other money management programs. STOPS applies
intraday and end-of-day security pricing to indicator based exits,
providing you with exits tailored to the price action. You no
longer have to juggle exit analysis between your charting program
and money management system. With STOPS, exit analysis and money
management are fully integrated.
STOPS
Exit Analysis features:
- Breakeven
price.
- Profit
price.
- Profit
percent.
- Estimated
profit percent.
- Maximum
adverse excursion.
- Maximum
favorable excursion.
- Automatic
trailing stops.
- Stop
triggered alert.
- Indicator
based exits using security pricing.
- Includes
broker commission.
- Exit
targets are fully user definable.
- Exit
targets can be overridden on any position.
- Fully
integrated with all STOPS money management tools.
The
following example illustrates STOPS Exit Analysis for a long
position:
- Account
exit targets are selected and default target parameter is
overridden as required. Each target raises an alert when reached.
Exit Targets and alerts are defined by the user. (View
Full-Size)
In
this example, all exit targets have been selected. Breakeven
price and profit price parameters are automatic. Profit percent
and estimated profit percent are both set to 4.0%. Maximum adverse
excursion (MAE) of 0.75 overrides default of 1.00 (denoted by
blue highlight) and maximum favorable excursion is 2.00. Alerts
will be raised when any of the targets are reached.
- Exit
targets and can be overridden for any position. Once overridden,
default can be viewed by holding cursor over the value.
Exit Targets
and alerts can be overridden for any position. (View
Full-size)
In
this example, position PHHM estimated profit percent exit target
of 3.5% overrides default of 4.0% (denoted by blue highlight).
The remaining exit targets use default parameters.
- Per trade
or per share / contract broker commissions are included in
all exit target calculations.
Broker commissions are used to calculate exit targets.
In
this example, $10.00 market order commission and $15.00 limit
order commission are used.
- Breakeven
Price exit target and alerts.
Breakeven
price is the sell price required to cover position acquisition
costs, including broker commission. The exit parameter is
"auto", indicating breakeven price is automatically
calculated on entry of the actual buy price (which includes
slippage) in the STOPS daily trade log. The "auto"
parameter may be overridden on any position with a specific
price target.
The
breakeven price alert is raised when the entered sell order
reaches the breakeven price exit target.
Breakeven exit targets and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1//05 at
$17.27 per share, including slippage. The breakeven price $17.35,
automatically calculated using $10.00 broker commission, is
listed in the security screen (under Even).
On
8/2/05, a $17.50 sell order raises three breakeven price alerts:
An alert message is displayed, the breakeven price is highlighted
in red in the securities screen and the 60005 alert identifier
is added to the status line allowing alert details to be viewed
as required.
- Profit
Price exit target and alerts.
Profit price
is the sell price for the desired profit after covering position
acquisition costs, including broker commission. The exit parameter
is "auto", indicating profit price is automatically
calculated using profit percent target, on entry of the actual
buy price (which includes slippage) in the STOPS daily trade
log. The "auto" parameter may be overridden on any
position with a specific price target.
The profit
price alert is raised when the entered sell order reaches the
profit price exit target.
Profit Price exit target and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1//05 at
$17.27 per share, including slippage. The profit price $18.04,
automatically calculated using $10.00 broker commission and
4.0% Profit percent exit target, is listed in the security screen
(under Profit).
On
8/3/05, a $18.20 sell order raises three profit price alerts:
An alert message is displayed, the profit price is highlighted
in red in the securities screen and the 60002 alert identifier
is added to the status line allowing alert details to be viewed
as required.
- Estimated
Profit Percent exit target and alerts.
Estimated
profit percent is calculated from the sell price or last security
price from pricing extract and includes position acquisition
costs, including broker commission. The exit parameter is
the target profit percentage.
The estimated profit percent alert is raised when the entered
sell order or last extracted security price reaches the profit
percent exit target. Using the extracted security price is
an extremely powerful alert, keeping you in touch with changing
market conditions.
Estimated Profit Percent exit target and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1//05 at
$17.27 per share, including slippage.
On
8/3/05, security pricing extract returns a last price of $18.20
which raises three estimated profit price alerts: An alert message
is displayed, the estimated profit 4.9% is highlighted in red
in the securities screen (under Est Profit %) and the 60006
alert identifier is added to the status line allowing alert
details to be viewed as required.
- Maximum
Adverse Excursion and Maximum Favorable Excursion exit targets
and alerts.
Maximum
adverse excursion (MAE) is the maximum amount the security
price goes against you during the trade. Maximum favorable
excursion (MFE) is the maximum amount the security price moves
is your favor during the trade. As a measure of the position
volatility, MAE and MFE assist immensely in locating your
stops.
For a detailed
discussion on using maximum adverse and favorable excursion,
see "Maximum Adverse Excursion" by John Sweeney, copyright
1997, published by John Wiley & Sons, Inc.
MAE is calculated as the greatest difference between the entry
price and the worst price that goes against a position before
the position is closed. MFE is calculated as the greatest difference
between the entry price and the best price that goes in the
favor of a position before the position is closed.
MAE and MFE alerts are raised when the calculated MAE or MFE
values reach the exit targets.
Maximum Adverse
Excursion exit target and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1//05 at
$17.27 per share, including slippage.
On
8/3/05, security pricing extract returns a low price of $16.00.
Maximum adverse excursion is $17.27 - 16.00 or $1.27, which
has reached the MAE target of $0.75 raising three MAE alerts:
An alert message is displayed, the MAE $1.27 is highlighted
in red in the securities screen (under MAE) and the 60003 alert
identifier is added to the status line allowing alert details
to be viewed as required.
-
Trailing
Stop exit targets and alerts.
STOPS
automatically calculates and adds optional protective trailing
stops to the STOPS daily trade log.
Incremental
Trailing Stops are automatically adjusted each time the market
moves a specified amount, in the required direction, until the
position is stopped out. Parameter "Market Change"
specifies the minimum market change required for the trailing
stop to be adjusted. Parameter "Increment" specifies
the amount to move the trailing stop in either currency or percentage
of purchase price.
The
trailing stop alert is raised when the trailing stop is adjusted.
Trailing Stop exit targets and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1/05 at
$17.27 per share, including slippage. An Incremental Trailing
Stop is enabled with a market change parameter of $0.50 and
adjustment increment of $1.25.
The
initial sell order of $15.70 is calculated using the $1.25 increment
parameter. Optionally, the reward / risk ratio may be used to
calculate the initial sell order.
On
8/2/05, security pricing extract returns a last price of $17.60
which is greater than the minimum market change parameter of
$0.50. The trailing stop is automatically raised by $1.25 to
$16.95. Optionally, this first adjustment may be raised to breakeven.
On
8/3/05, security pricing extract returns a last price of $18.20
which is greater than the minimum market change parameter of
$0.50. The trailing stop is automatically raised by $1.25 to
$18.20.
This
alert is raised whenever extracted security pricing reaches
the stop order (sell order), freeing you from constantly
checking your broker.
Stop Triggered
alert. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1/05 at
$17.27 per share, including slippage. The initial stop order
is $16.60. The stop order is raised to $17.50 on 8/2/05 and
then to $18.20 on 8/3/05.
Security
pricing extract returns a 8/3/05 high price of $18.20 which
triggers the $18.20 stop order. An alert message is displayed
and the 60007 alert identifier is added to the status line
allowing alert details to be viewed as required.
- Profit
Percent exit target and alerts.
Profit
percent is calculated from the sell price and includes position
acquisition costs, including broker commission. The exit parameter
is the target profit percentage.
The profit
percent alert is raised when the actual sell order reaches the
profit percent exit target.
Profit Percent
exit target and alerts. (View
Full-size)
In
this example, 250 shares of PHHM are purchased on 8/1//05 at
$17.27 per share, including slippage.
On
8/3/05, a $18.10 actual sell order, which includes slippage,
closes the position and raises three profit percent alerts:
An alert message is displayed, the profit percent is highlighted
in red in the securities screen (under Profit %) and the 60001
alert identifier is added to the status line allowing alert
details to be viewed as required. All alert details are updated
for the closed position statistics.
Alert Status Line and Details.
In
this example, position PHHM alert details are displayed by clicking
the status line.
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