Maximization
Pattern recognition and entry are great, but they are not going to help you
succeed without proper trade management.
11:40:05
Intraday Setup Alert
The e-mini S&P futures (ESZ2)
are tracing out a Haggerty 1-2-3 top on the intraday chart. ESZ2 is up 12.50
to 853.75.
The alert goes out when the contract is trying to first form a 1-2-3 top, but
as it happens, it forms a new higher 1-2-3 top between 11:25 AM EDT and 12:20 PM.
When the pattern breaks, the e-mini falls roughly 8 points from the entry near
853 to 847.
At this point I like to sell half my position and move my stop
to my entry price. This insures a profit of 8 points on half my position, or net
4 points profit in the event my stop is hit. From here I trail the position,
using a two-bar technique at points of consolidation, giving it a little more
room than my initial stop. This is due to the fact I am already in the black, so
I am willing to give some back for the possibility of maximizing the move lower,
if the case presents itself.
In this case, the position was stopped out at 846.50, so the
gross would have remained around 8 points of profit on the full position. While
in this instance it did not get you any extra out of the move, it is better than
getting greedy, or scared and pulling everything off after 3 or 4 points.
The other reason I like this technique is that after entry, it
takes your judgment or fear out of play. You trail the stop, and let the market
determine your exit. Many traders would benefit by using this method for
maximizing the gains in profitable positions.
Until tomorrow,