Ideally winning trades should have a longer holding time than loosing trades. If you have long hold times on losers than this implies that you are not able to either recognize when a trade is not working or struggling mentally to let go and except the loss.
Great Traders have longer winning hold times which implies that they are maximizing profits potential and likely recognizing signs within the market that further confirm their entry's.
Losing Traders tend to Hold on to Loser for longer period in essence Maximizing loses.
There are a few ways to time stops for exits.
I use 2 time stop exits for scratching loses.
One of the times I use is CYCLE STOPS - What I do is use the 2nd 500 tick cycle after entry to determine the potential for price to move in my favor.
- If price has moved in my favor after the 2nd cycle I focus on signs that may indicate Target potential or a price reversal for a good exit. (ie. 1500 Exhaustion, Probars Etc.)
- If price Does NOT move in my favor after the 2nd 500 tick cycle I EXIT the trade win, lose or draw.
A Major Note Regarding trades that should be Scratched immediately. When we wrong about a position price may NEVER make it to the 2nd cycle at all. In these cases we should be aware of the clues that say GET OUT!!!!
The MAJOR CLUES to scratch or Reverse position.
#1 Price moves away from entry immediately and stays.
#2 Price spends little or NO TIME in favor.
#3 Price breaks S/R on 500, 1500 or 4500 tick charts.
The other way will be more of a result of the first method that then becomes its own source function by taking into account the time data of winners and losers. This method is still being developed and may change.
After I have determined through performance the average holding time from wins and loses I can then Clock A Trade to determine whether it is approaching that threshold for losers and then Scratch the trade at that time.
My method for monitoring my performance of Holding Time is to divide the winning time by the losing time to determine a ratio.
Then I compare the ratio to a Scale for a determination of performance.
This is VERY important in my trading as it keeps me cognizant of holding losers. It also helps to prepare me for reversing when necessary.
**Average Holding Time Ratio should Coincided and Match The Over Trading (grade colour) to indicate GOOD performance. Non matching between the 2 means that you either Over Traded or held Losers too long. When these are NOT in sync the Bottom Line is Greatly affected regardless of other performers.**
The Ideal Score Combination Is:
Over Trading = Green - Blue - Blue - Green
T Time Ratio = Green - Blue - Green - Blue
ANY other Combination is out of BALANCE and can indicate potential suffering performance.
The total Average Market Exposure Time is also noted at the bottom of the Time Ratio. This Number is used to determine how much actual market exposure I'm experiencing on a given day, or month. I want to limit my exposure to only the best trades (ie. Winners or Small loses). So keeping a running total tells me if I'm trading in a very slow environment (which means I'm Increasing my Exposure) or Maximizing my Exposure by spending time in winning trades to Maximize profits. This can be known after calculating the average Win/Loss time ratio.
click to see "The STOP LOSS Conspiracy:
Also Quick Max stop outs can lower the time in losing trades causing your ratio to be slightly misleading, BUT our STOPS should rarely get hit if we are Scratching trades upon 1st sign of fail er. Baring any Quick Stops being hit the ratio is a good indication of trade management performance.
