Sep 7th 2019, Silver Chartbook

Exits over entries

We cant point out often enough the importance of exits. There have even been studies showing that there can be systems with random entries that are still viable with great exits and proper money management applied. Now we do not advocate such systems but merely mean to illustrate how important exits truly are in relationship to entries. Entries have enjoyed such a magnitude of attention only because they come first. Of course, a market speculator simply asks “when do I buy?”. Since this is a quite difficult question to answer and in most cases takes years to find a satisfactory answer for, exits live in the dark. They come second. Our recent partial profit taking exit on our monthly silver holding is a good example to explain a simplified exit principle. Both, entry and exits, were posted live in our telegram channel. Exits over entries – where profits truly come from.

Daily chart, exits over entries, silver/US Dollar 9/3/2019, “grab it while you can”:

Silver in US-Dollar, daily chart as of Sep 3rd, 2019

Silver in US-Dollar, daily chart as of Sep 3rd, 2019

On September 3rd 2019 we aggressively took a partial profit with our Quad Exit strategy. An unusually extended bullish candle was the first warning signal of a possible temporary top. Weekly charts were suggesting for more room to the upside slightly above the twenty dollar mark.

But we got out – why? Neither precision nor greed are good companions in the market arena. Selling into bullish liquidity for good fills and taking the opposite side of the masses is good advise. If ones system requires to hold on for dear life to maximize profits it needs an overhaul.

Generosity is a virtue and it is as such also in trading. Instead of a feeling of “fear of missing out” rather holding a picture in ones mind of “leaving money on the table for others” is the appropriate mental attitude.

Exits over entries, silver, daily chart, 9/4/2019, prices climbing up:

Silver in US-Dollar, daily chart as of Sep 4th, 2019

Silver in US-Dollar, daily chart as of Sep 4th, 2019

On the following day one might have thought, that taking profits on the 3rd of September, was premature. The bulls are still in control. Trying to pick tops though is a fool´s game. Always ask the question: “How much do I need to risk for further price advances and more profits?” Already the next day was a rude awakening for those who prefer confirmed exits over targets, “top pickers”, precision traders and anybody else who was “hoping for more”:

Daily chart, silver in US Dollar – September 5 2019, “what goes up, must come down”:

Silver in US-Dollar, daily chart as of Sep 5th, 2019

Silver in US-Dollar, daily chart as of Sep 5th, 2019

From a risk standpoint one would have needed to risk more than twice as much capital than what was able to gain in this last move. A bet we are simply not willing to take. This in addition to a very low hit rate for these final continuation blow of tops to even mature. Better to take your profits while you can do so with ease!

Exits over entries, daily chart, silver in US Dollar – September 6 2019, “you can always go back in”:

Silver in US-Dollar, daily chart as of Sep 6th, 2019

Silver in US-Dollar, daily chart as of Sep 6th, 2019

On the 6th of September the bearish picture is confirmed. Why take these kind of risks. A close to 6% move against ones position in 2 days should be used to reevaluate upcoming entries. This with money freed, by exiting at proper, conservative targets.

To be able to follow such instructions one always needs to keep in mind the larger picture. The higher the time frame of ones market participation, the more difficult it is to not get entangled in a behavior  guided by emotions that are not principle based.

In our case this specific exit provided a return of over 30%. This within capital exposure of 4 months. A high enough return to put some profits in the bank.

Any exit strategy that allows for partial profit taking puts the struggle for the investor, to pick the perfect exit, at ease.

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About the Author:

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

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