6. Exit Signals

Trade Indicators

Use a Trend Indicator to exit from the trend. Adjust the Indicator Time Frame to suit the cycle being traded.

Example

Charles Schwab with weekly price bars and 7-day and 150-day exponential moving averages.

1. Entry [L] on 30 October 1998 at $10.13.
2. Exit on Key Reversal at [K] on 15 April 1999 at $44.75.
3. Remaining position stopped out at [X] on 25 May 1999 at $33.13.
4. Price crosses below MA150 at [Y] on 14 June 1999 at $27.25.
5. MA7 crosses below MA150 at [Z] on 4 August 1999 at $24.50.

If no stops had been activated, the position would have been closed either:

• At [Y] when price fell below the 150-day moving average; or
• At [Z] when the 7-day MA fell below the 150-day MA,

depending on the exit strategy.

Trade Summary

Entry [L]	October 30, 1998	$10.13
Key Reversal [K]	April 15, 1999	$44.75
Stopped Out [X]	May 25, 1999	$33.13
Price crosses below MA150 [Y]	June 14, 1999	$27.25
MA7 crosses below MA150 [Z]	August 4, 1999	$24.50

Returns vary between 440 per cent and 240 per cent.

Note how important it is to exit at the right time in addition to timing the entry: the correction retreated to below $18.00.

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