Steve Nisons

Candle Charting Special Topic

Exit Strategies
Syl Desaulniers
Nison Certified Trainer
Nison Candle Software Tech Support

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Candlestick
Charting
Techniques

Candles +
Western
Charting
Tools

Candles + Trade Management

Exiting a Trade
An area of trading that gets very little
attention compared to the other end
of the trade the entry.

Exit vs. Entry

Success in trading has more to do
with how you exit your trades, than
it does with your entry.

Exit Methods

Targets
Stops

Stop Loss
Standard stop loss types
Hard
Soft
Trailing

Stop Loss
Deciding on where to place a
stop loss is one of the most
difficult tasks in technical
analysis.

Stop Loss
Standard stop loss types
whats best?

Stop Loss
Should we use a tight stop loss to cut any losses
quickly, or a wide stop loss to allow some room
to move?
How quickly should we move the stop loss to
breakeven?
Should we take profits at a target, or should we
let the profits run, perhaps trailing a stop behind
the price?

Stop Loss Strategies

1. Since using Candlesticks for Entry signal,
traditionally use the low of the pattern as
your INITIAL Stop.
Rules for each pattern are described in full in DVD set

Stop Loss Strategies

2. More conservatively, it is critical that you
allow for the volatility of a stock, that is
the range a stock moves during the
course of a trading day.

A good rule of thumb is to either set a stop-loss

slightly below the low of the Entry day or the
previous day, or slightly below a key EMA,
trendline or support below the stock (8, 22, 50,
BB, etc).

Stop Loss Strategies

3. Use a TDD (Three Day Displaced) Stop
- a three day displaced simple moving average (3SMA)
- used to determine an initial or trailing stop loss
- the value of 3SMA three days ago becomes the stop limit.

Stop Loss Strategies

4. Polarity
If entering on momentum beyond a former
support or resistance, polarity becomes initial
Stop

Stop Loss Strategies

We cannot know, except with hindsight, what will be
the most profitable exit STOP strategy for that
particular trade.
Sometimes a tight stop is best.
Sometimes a wider stop is best.
sometimes a trailing stop is best.

Targets

Candle signals
Moving averages
Pivots
Windows
Trend lines
Fibs

Bollinger Bands
Keltner Bands

Candle Signals
High or Low of confirmed candle pattern

Engulfing
Sash
Hammer / Shooting Star
Dark Cloud / Piercing
Doji

Morning Star / Bullish Engulfing

Dark Cloud Cover

Bull Sash / Evening Star / Shooting star

Dark Cloud Cover

Moving Averages
Traditional
20/50
50/100
50/200
100/200
??/???

Fibonacci
21/55
55/89
55/144
89/233
??/???

55EMA

55 EMA

100 SMA

100 SMA

100 SMA

100 SMA

Pivots
1. An indicator used to determine the overall
trend of the market over different time
frames.
simply the average of the high, low and closing prices from
the previous trading day

Pivots
2. Cycle Highs/Lows used to determine the
overall trend of the market over different time
frames.

Windows
Candlecharts favorite pattern
At times difficult to see
NCS spots them easily

Trend Lines
A line that is drawn over pivot highs or under
pivot lows to show the prevailing direction of
price.
A visual representation of support and
resistance
Used to show direction and speed of price.
Describe patterns during periods of
price contraction.

Fibs
The Fibonacci retracement is the potential
retracement of a financial asset's original
move in price.
use horizontal lines to indicate areas of support
or resistance at the key Fibonacci levels before
it continues in the original direction.

Fibs
Extensions consist of all levels drawn
beyond the standard 100% level and are
used by many traders to determine areas
where they will wish to take profits.
The most popular extension levels are 161.8%,
261.8% and 361.8%.

Whats possible??

Conclusion
1) The profit or loss taken out of the trade is
more a result of the chosen stop and exit
method, not our entry.

For the same entry, there can be numerous possible

exits, some profitable, some breakeven and some at a
loss.

Conclusion
2) We cannot know, except with hindsight,
what will be the most profitable exit strategy
for that particular trade.

Conclusion
In other words the EXIT is more
important than the ENTRY.
The EXIT has more bearing on whether
the trade ends in profit, or in loss.
But there can be no perfect EXIT strategy
that best manages every trade.

Conclusion
Follow your RULES
Live to trade another day!!

Steve Nisons

Candle Charting Special Topic

Exit Strategies
The End
Syl Desaulniers
Nison Certified Trainer
Nison Candle Software Tech Support

Legal Notice: This webcast and recording is Candlecharts.com and may not be copied,
retransmitted, nor distributed in any manner whatsoever, including, but not limited to, video or
audio file sharing sites, online auction and classified sites, discussion forums nor any other
means. Illegal redistribution of this content may result in criminal and/or civil fines, pursuant to
applicable international copyright law. All rights reserved worldwide.