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In the trading room, Al often mentions that he ends up scalping out of most of his swing trades either for a small profit or for a small loss. In general, when taking a swing trade, how much time should someone give the trade before they decide to simply scalp out?
For example, if there is a good swing long set up with a good signal bar, but the entry bar turns out to be a bear bar closing below it's midpoint, is it always reasonable to exit 1 tick below that bar, or are there some contexts where that would be a poor management decision?
What about if the follow through consists of a couple consecutive doji bars? In that case, is it reasonable to just sell on the close of a doji bar for a breakeven trade, or is it better to give the trade more time?
The reason I ask is that I have a tendency of using wide stops and scaling in when the market goes against me. Although this results in a high win percentage, there are some instances where I end up taking huge losses, which is something I really need to work on. However, I also want to avoid exiting perfectly good trades too soon, so I'm curious in hearing how others manage these types of situations.
Thanks!
Jake
For example, if there is a good swing long set up with a good signal bar, but the entry bar turns out to be a bear bar closing below it's midpoint, is it always reasonable to exit 1 tick below that bar, or are there some contexts where that would be a poor management decision?
If the setup is strong, like you are describing, you may give it more room.
What about if the follow through consists of a couple consecutive doji bars? In that case, is it reasonable to just sell on the close of a doji bar for a breakeven trade, or is it better to give the trade more time?
Yes, same thing: for the bears a doji is a L1 but, after a good swing buy where the MKT might have reversed, it is a bad trade, so bulls should not exit.
