Dear AW10 want to ask little bit off topic .........
When we have a break out and move rapidly without giving any pivot to trail stop ( Prefer to trade on 60 min pivots ..) then a V shaped recovery and hit stop ..... is it ok to bring SL to break even after such move .....
But ..... after how much move ?? and if it kiss our SL and then reverse back then what to do .............??
Till now only using Pivot ...... want to get some ideas from you
here posting two charts with two scenarios .....
Waiting your comment ..............
Satya, Sorry about delayed reply. But here are my thoughts.
Managing trades with trailing stops is always a tricky issue. If we move our stops too fast, then we risk being stopped out at wrong place.. and if we wait then we leave too much of paper profit no the table.
It all depends on our exit strategy. I totally agree with you on placing the stops at Pivot points. I believe the if we put stops at some random level then it just ensures that they are hit.
Over a period of time, in my observations - V type recovery are not too frequent.. and market's respect for pivot levels (with appropriate filter to hide our orders from smart players) is lot more frequent.
I can only suggest some ideas about protecting profit when it has come from abnormal move.
Don't know if you have read about Chandelier Exit Strategy or not.. Like chandelier hangs from the roof (say 2 feet's), similarly we can define our exits hanging few points below the latest roof i.e latest high of the market (for long trade). As market makes new high, our stops also moves up. But if market comes down, then it ensures that we don't loose more then certain amount of profit cause our stops don't move down but stays at same level below the latest high (i.e. equal to the height of chandelier). People use 3 ATR as this height, but one can also use x number of points depending on one's comfort level.
Another idea could be to split our position in two parts - swing part and scalp part (here our definition of scalp will not be 5 points move but a trade that captures only 1 leg of the trend). And use different exit strategy for each part. Swing part can continue to follow Pivot based trailing logic and chase multiple legs of the trend whereas scalp part can be managed by Chandelier exit / target based exits / 1 bar or 2 bar pattern based exits (engulfing, hammer, etc) or any other faster exit approach ..
Generally we should have fair idea about the trend size in our timeframe. So say, if we have observed that 70% of 60m trends at not more then 150 points in one leg and then they retrace, then we know when mkt gives us 200 points leg, then something abnormal is taking place and hence better to protect exceptional profit by being more aggressive and look for next entry setup.
(leg = distance from 1 Pivot high to next pivot low, Trend = 3 wave or 5 wave pattern i.e. having 3 legs or 5 legs)
I am sure, as a seasoned trader, you will not experiment it in market but backtest it first.
Hope this gives u some ideas to think about.
Managing exits have been (still they are) challenge for me as well. Would certainly like to get your thoughts on this. If you know of any good source of info/book etc then please share it.
Happy Trading.