P1: PIC/PIC c07
August 12, 2008
Printer: Yet to come
Exit Strategies and Trade Management
FIGURE 7.6 XAU Continued Higher after Trade Exit
at hand and what you have learned in the chapters on momentum, pattern, price, and time position. None of the decisions was arbitrary. Stops were never adjusted just because there was a certain amount of unrealized gain. Stops were never adjusted at a fixed and arbitrary amount from the current market price. There was always a logical reason and purpose for each trade management decision. If you use a logical thinking process throughout a trade and make logical tactical decisions based on the actual market activity as a trend develops, you will usually capture most of the trend. Was October 11 a Wave-5 high for a perfect trade campaign that was entered within points of the low and exited within points of the high? Figure 7.6 adds two months of data from October 11 when the long-term unit was stopped out. October 11 only began a minor one-week correction, followed by a new high into early November, before beginning a more substantial correction to the entire bull trend that began months earlier on August 16. But as of mid-October, conditions were in place to complete the bull trend, including overbought weekly momentum, and it was an appropriate time to trail the stop on the long position very close to the market.