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Glossary

Chapter 7 Exit Strategies and Trade Management exit strategy The conditions to exit an open trade. The exit strategy must be determined before the trade is entered. The exit strategy may be completely objective, such as trailing the stop at the one-bar-high/low following a momentum reversal. Or the exit strategy may be more subjective and adjusted as a market progresses. Even if the exit strategy is more subjective, the objective of the trade and general conditions to consider exiting the trade should be defined in advance. See trade examples in Chapters 7 and 8 for how exit strategies are adjusted as a market progresses and provides new information.

Every trade should be taken with at least two units. The exit strategy is different for each unit. One unit is considered short-term and is exited if the market reaches a minor corrective target. The second unit is considered long-term and is exited at a trend target. A multiple-unit trade plan should increase net profitability over time.

multiple-unit trading

risk/reward The amount of money at risk versus the potential reward. Usually shown as

a ratio such as 3:1, which is really the reward to risk or $3 potential profit for $1 risk (capital exposure). The risk per unit can be defined as the difference between the entry price and the initial protective stop price. The reward is always just a best guess of the probable minimum move the market is likely to make. trade management

The general term for how each trade is managed from entry to exit.

The plan as to how the business of trading will be conducted, including conditions for entry, entry to exit strategies, maximum capital exposure, and trade management. Every successful trader has a trade plan. See Chapter 9 for the four key elements of a trade plan.

trade plan

Chapter 9 The Business of Trading and Other Matters A set of completely objective rules that determine the exact entry, stoploss, and exit prices. Also called mechanical trading. “You can’t buy success.� To my knowledge, no trading system has been sold that has been consistently profitable in realtime trading over time. Instead of buying a system, give the system cost and your trading account to the charity of your choice. Put your money to good use rather than blowing it on a futile endeavor.

system, trading

The plan as to how the business of trading will be conducted, including conditions for entry, entry to exit strategies, maximum capital exposure, and trade management. Every successful trader has a trade plan. See Chapter 9 for the four key elements of a trade plan.

trade plan

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(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

(wiley trading) robert c miner high probability trading strategies entry to exit tactics for the for  

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