what to use to determine how long a position should be held?

[patrick_fx]

Hi all,

I am a newbie who just started the Holy Grail quest. So far, I’ve found a number of tools to help me identify the entry point. However, I don’t know how long should I hold the position. Sometimes, I hold it too short (manually close the position) and lose out the profit. Sometimes, I hold it too long (the price doesn’t hit the TP level) and the price reverses. Can anyone suggest what to use to determine how long a position should be held?


Please advice,
Patrick

[Trevman]

if you have a buy and it reaches a point where it looks like a sell or your not sure, exit it there

[4X4X]

Hi,

It all depends on what is your trading style, whether you are a scalper (targets 5-10 pips), an intraday trader (targets 25-80 pips) or a position trader how keeps his traders open for few days to weeks (targets 200+ pips).

If you want to be a short term traders with 2-3 qaulity trades every day, you can set a target of 30-50 with a stoploss of 15-25.

Another method is to determine, looking from day start, whether the market is bullish or bearish (or whether it is going up or down) today or during past 1-3 days. Suppose if it is moving up, as the market takes a dip, go long ... buy a lot and keep it upto next resistance. Take your profit on the next resistance and then wait and watch, if the market breaks the resistance, go long again upto higher resistance, and keep doing that upto the point where the market either changes it direction or takes a retracement.

Resistance and Support can be determined by simply looking past charts, start drawing horizontal lines on each support and resisitance and if you use MetaTrader for charting, save the chart as a template, so whenever you want to trade the same pair, you can open its charts and apply that template, this way you will get your targets automatically.

Another way to determine your targets is to use Intraday Pivot Points. One more way to determine targets is to use Fibonacci Retracements ... hope this helps.

[patrick_fx]

Trevman, thanks for your suggestion.

Originally Posted by 4X4X

Hi,

It all depends on what is your trading style, whether you are a scalper (targets 5-10 pips), an intraday trader (targets 25-80 pips) or a position trader how keeps his traders open for few days to weeks (targets 200+ pips).

If you want to be a short term traders with 2-3 qaulity trades every day, you can set a target of 30-50 with a stoploss of 15-25.

Another method is to determine, looking from day start, whether the market is bullish or bearish (or whether it is going up or down) today or during past 1-3 days. Suppose if it is moving up, as the market takes a dip, go long ... buy a lot and keep it upto next resistance. Take your profit on the next resistance and then wait and watch, if the market breaks the resistance, go long again upto higher resistance, and keep doing that upto the point where the market either changes it direction or takes a retracement.

Resistance and Support can be determined by simply looking past charts, start drawing horizontal lines on each support and resisitance and if you use MetaTrader for charting, save the chart as a template, so whenever you want to trade the same pair, you can open its charts and apply that template, this way you will get your targets automatically.

Another way to determine your targets is to use Intraday Pivot Points. One more way to determine targets is to use Fibonacci Retracements ... hope this helps.

4X4X, Thank you very much for the info. Yes it helps a lot. I've heard about Fibonacci, Pivot Points, etc. but had no idea what they're for. I'll do some research about those tools you mentioned.

In the beginning, I usually took profit after gaining 10 to 20 pips + spread. Then I found out that I've left money on the table (got out too soon). So I changed my trading style a bit. Recently, I aim for 50 to 100 pips + spread. I guess I'm qualify as an intraday trader.

Are you using MetaTrader? I've heard a little bit about this platform. Currently I'm using platform. So far, I have no complain. Is MetaTrader better than ? Should I do some investigation on MetaTrader?


Thank you for your very useful info

[4X4X]

Hello Patrick,

Fibs/Fibos/Fibonacci and Pivot Points are both calculated mathematically on pior moves and they form support/resistance for the current one. For intraday trading you can use intraday Fibs and Pivot points. If you draw Fibs on long term chart like weekly, they will give you long term support/resistance and you may discover then that these are the points where the market really resisit to break or if broken it has very high tendency to get the next level.

Fibs ratios (23.6, 38.2, 50, 61.8, 76.4 & 100) are the ratios discovered by an Italian mathimaticain Fibonacci and he found this ratio is found in the growth of many natural events, you may find very detailed info on that on webpages, or visit www.forextradersworld.com there is lot of good info and e-books available on this website.

Pivot points are calcualte using mathematical formula, the main pivot point for today is the high+low+close of yesterday/3. Now, if the market opens above the number that you get from this formula, it has very high tendency to be bullish and going up and vice versa for the lower opening. Other pivot points S1, S2, S3, etc. and R1, R2, R3 are also calculated using mathematical formulae.

Computers have made life easier, you can use the builtin functions of trading platforms to draw Fibs and pivot points on your charts. For pivot point I will post an attachment of MetaTrader 3.83 custom indicator, which when applied to a chart will draw coloured line of all pivot points.

You can also draw trendlines or channels which form the support/resistaince and give you entry/exit points.

MetaTrader is one of the best known charting/trading platform, developed by a Russian company MetaQuotes, if is absolutely free and has one of the best charting capabilities. Most of the traders use MetaTrader for charting and many like to use brokers how have MetaTrader as their trading platform.

In MetaTrader you can easily draw Fibonacci Retracement by first clicking on it button on the tool bar that will change the mouse cursor to Fib drawing tool. If the market is moving UP, you will have to seen last big move from UP to Down and then put you mouse of the top of the last big move and drag to its bottom, it will give you all Fib ratios on your chart in the form you dotten horizontal lines, vice versa for move down .... hope you will not find it too complicated.

[4X4X]

I have found that whatever your entry/exit strategy, to be really successful you have to have 2 more qualities, money management/risk management and patience. Shortcoming to these qualities are the reasons of failure of most of the traders.

[4X4X]

In the attahed zipped file you will find 2 files, copy them to your MetaTrader 3.83 version's following directory, you can use MetaTrader 3.83 of any MetaTrader based broker liken -fx.com (remove - from the URL), strategybuilderfx.com, fxdd.com, or .com. You can directly download it from Here.

copy it to C:\Program Files\Trader\experts\indicators folder. Now open a chart and click on the button on the toolbar called Navigator. In the left pane you will see a folder called Custom Indicators, open it, then double click on Detail Pivot Daily and click OK. This will apply the indicator on your chart and give you the the pivot points of today on your chart.

Have a good day!

[4X4X]

I don't use any indicator like Stoch, BB, or ADX, etc. I just use support/resistance to get my entry/exit points. I have a 21WMA line on my chart to give it an official look.