V.16:5 (233-239): Using Barrier Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick

V.16:5 (233-239): Using Barrier Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick
Item# \V16\C05\037BARR.PDF
Availability: In Stock

Product Description

Using Barrier Stops In Exit Strategies by J. Katz, Ph.D., and D. McCormick

A simple technical method for exiting a trade is the break of a trendline on a chart. This article measures the performance of using this strategy as an exit rule.

In recent articles, we explored the topic of exits and experimented to see whether the behavior of simple exit strategies could improve the performance of a system whose trade entries were essentially random. Our first exploration was of an exit strategy that involved a profit target exit, a stop-loss exit, and a time-based exit. Then we examined the behavior of trailing stops. In all instances, we used a standardized random entry system in which a random-number generator provided us with the entries into positions from which we could exit. Thus far, we have found that a proper combination of even simple exit methods (for example, fixed–dollar amount stop-losses and profit targets) can substantially improve the behavior of a trading system — even turning a random, losing system into a profitable one! We also learned that employing stop-losses and profit targets of the wrong sizes, or incorrect parameters for trailing stops, can ruin a trading system, making it perform significantly worse.

Finally, although there is some interaction between the entry method and the behavior of the exit strategy, we discovered that there was also much similarity across entry methods in the behavior of the exits.

*Note: $2.95-$5.95 Articles are in PDF format only. No hard copy of the article(s) will be delivered. During checkout, click the "Download Now" button to immediately receive your article(s) purchase. STOCKS & COMMODITIES magazine is delivered via mail. After paying for your subscription at store.traders.com users can view the S&C Digital Edition in the subscriber's section on Traders.com.

Take Control of Your Trading.
Professional Traders' Starter Kit
All these items shown below only $299.99!
  • 5-year subscription to Technical Analysis of STOCKS & COMMODITIES, The Traders' magazine. (Shipping outside the US is extra. Washington state addresses require sales tax based on your locale.)
  • 5 year access to S&C Archive
  • 5 year access to S&C Digital Edition
  • 5-year subscription to Traders.com Advantage.
  • 5-year subscription to Working Money.
  • Free book selection.
  • Click Here to Order