10-22-2018, 01:53 AM
Sensible advice here:
Profits in the financial markets require multiple skills that can locate appropriate risk vehicles, enter positions at the right time, and manage them with wisdom and a strong stomach before finally taking an exit when opportunity cost turns adverse. Many investors, market timers and traders can perform the first three tasks admirably but fail miserably when it comes time to exit positions.
Getting out at the right time isn't difficult, but it does require close observation of price action, looking for clues that may predict a large-scale reversal or trend change. This is an easier chore for short-term traders than long-term investors who have been programmed to open positions and walk away – holding firm through long cycles of buying and selling pressure. (For more, see: Exit Strategies: A Key Look.)
While buy-and-hold strategies work, adding exit timing mechanisms can yield greater profits because they address the long-developing shift from open outcry and specialist matching to algorithmic software code that seeks out price levels forcing most investors and traders to give up and exit positions. This predatory influence is likely to grow in coming years, making long-term strategies more untenable.
3 Early Warning Signs That You Should Exit a Trade | Investopedia
The article suggests three clues:
- High volume days
- Failed price swings
- Moving average crosses and trend changes
