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5.6.5 Exit Signal 4 - PeakOut Early In the Direction of Trend
Whenever there is a PeakOut early in the direction of the trend (often following a sharp
correction), stops are set to exit one third of the position at each of the three DevStops. In Kase’s
study, Dev1 was hit only 37% of the time following this signal, so taking an exit will many times
result in a reentry just a few bars later. By pulling in stops and scaling out at Dev1, 2 and 3, exits
are consistent with the observed probability of turns.
Exit Signal 4 - PeakOut early in trend
5.6.6 Exit Signal 5 – No Signal
Though rare, there are times when the market will reverse direction without warning, i.e. a
PeakOut, KCDpeak or divergence. When this happens a full exit is take at Dev3.
5.6.7 Inactivity Exit Guidelines
At times the market will stagnate at which point an exit can be considered. If there is no profit in
the trade after five to eight bars, an exit may be taken due to inactivity.
5.6.8 Position Holders - Daily Chart Exit Rules and Stops
The guidelines outlined above pertain specifically to day traders. For the most part, these rules
can also be applied to position holders (traders who hold a position for days to weeks), but with
minor variations to placing stops and exits. Position holders can establish a trade by scaling up
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