Saturday, January 26, 2008

Trade Update on Ultra QQQ ProShares (AMEX:QLD)


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As mentioned previously, I bought Ultra QQQ ProShares (ETF) (AMEX:QLD) back on Wednesday @68.

On Friday, I sold it when it broke below 73 the second time in the afternoon session. I could have, and should have sold it when it was trading at 78 in the morning, but I didn't pull the trigger.
The main problem was that I did not have an exit strategy. I think I've got a handle on picking the right time to get into the trade, but I don't put as much time and focus into figuring when to exit the trade.
Wait the for the pop from the FOMC meeting? Fade the gap? Move stop to breakeven and let the profits fall where they may? Look for a break of trend? All of the above thoughts were floating in my head and as a result I was unable to make a decision.
Obviously for the next trade, I will have to work out an exit strategy.


JMJAtlanta said...

There was a study done, I want to say it was mentioned in Douglas' book "Trading in the Zone" but I could be wrong. That even with random entries, you could be profitable with the right exit strategy. Important to have? I'd say so.

I'd also say that it is important to use a strategy that has been thoroughly tested. You have to have confidence in the strategy.

In my own trading, I've found that with SOME of my strategies the risk/reward ratio is 1:1 and I should still take the trade. That kind of breaks from conventional wisdom of 1:2 or 1:3.

Remember to find a strategy and stick with it until you know if it works or not. Each time you change a strategy, you must wait to see the results (or backtest).

Phileo said...


Yeah, I don't know if I have enough patience to backtest an exit strategy, but I certainly agress with being consistent in executing the same strategy. Kind of goes back to planning out the trade better.....