Thursday, 28 April 2011

How to stop exiting too early - How about "EXIT SETUP"

I have noticed many people struggle with identifying correct setup.
Once that is done the next problem comes staying in the trade until "Exit Setup" is created.
Lets now create a new mindset. Lets give it names.

Its time we make  firm decisions and promise to stick to it.

To trade we look for what we call
Entry Setup.

To ensure our setup is there we would look for the following rules, while "staying in the now". This is the mental condition bit. Stay in the NOW. How do we stay in the now? simple, look at Current AO Bar, Current Gator Lines, Current AIMS levels. We can also have an overview of entire picture but most important is current ones.

Lets Look at our Rules, that "create" our setup.

Three Trading Rules to make it simple

Rule 1 - Is the Alligator Sleeping?

Rule 2. Is AO Close to Zero Line? Preferably flat at Zero Line.

Rule 3. Is AIMS Level Close to Red Line?
(Rule 3 Modified 28/04/11)

AO: Take Trades off the bars near ZL.
Alligator: Take Trades while lines are intertwined and flat i.e.  sleeping , atleast snoozing LOL.
AIMS:  Take trades ONLY on break of AIMS Level i.e. 1pip + spread above when going long, and 1pip below when going short, and prefer to take trades when AIMS levels up and down are not too far from each other.

Rule 3 comes after Rule 1 and 2 are met already. By following Rule 1 and 2 we create the correct setup, whereas following Rule 3 would ensure we make entries close to exit point, ie. red line.

As a rule we can say, is entry close to Red Line?. e.g. entry should not be e.g +15 on m1 and +25 on m5, away from escape route, ie. the red line or the opposite AIMS level, which ever you decide to take as exit point.
Note: 15 or 25 pips distance is for demonstration purposes only. Although it applies to EU during LO and NY session, since each pair has different wave length and behaves differently during different  periods of the day, of the week, of the month, of the season etc. brings different volatility and character.

Following the above would ensure we focus more on "Taking Profits" and less on "bailing out", "Taking Heat", "Paying Rent", "Losing", "Giving it Back". We need to take such words/statements out of our vocabulary. To remedy the "Negative" words/statements I suggest we use. 


After we identify and take the Entry Setup we search/wait for Exit Setup.

Rule 1.  Has Candle Closed on Red Line? (Or green line if that's what you decide to use, its entirely up to you, but I'd suggest stick to Red Line to start with)
Rule 2. Has AO Changed colour? if yes has it Diverged as well? I yes to both Exit at will, or tighten SL by either following candles or following AIMS either on current or lower TF. This would ensure we take maximum pips out of a move.

Note: Exit Setup just came to my mind and instead of losing this thought I've recorded it here. Expect some fine tuning later.


  1. Immy, you have given a little more clarification,keep up the good work. It does make it clearer.Would love it if you could post some articles or trades where you are reading the waves. My struggle is trying to figure out what wave we are in.I know the basics of end of 3rd wave and end of 4th wave.Do we really need to know the wave count. Thanks, bulldog

  2. good post today imran.........keep them coming

  3. Hello.
    Thanks for your blog.
    Few questions regarding entry setup:
    You would not take the trade at a valid fractal breakup if AO is NOT close to the redline?
    Why would take the trade when alligator sleeping? Maybe i have not well understood
    What would be your entry signal? Break in AIMS level?


  4. Hi Kaye Terry, thank you for commenting. It is absolutely not necessary to count the waves before entering a trade. No need to spend more than 10 seconds on wave counting. Remember we dont count waves we just check AO and even without knowledge of EW AO would let you trade AO accordingly. Just like I tried to explain in my previous posts. I must say some of the previous posts could may well be regarded as the building blocks of this strategy.

    Eric, Perhaps as Terry asked, I shall add some pictures to the Setup Tab up there. hopefully that will clarify your questions. Please have a look at the tabs above to clarify your questions though.


  5. Hi Imran,
    Thanks for the post. I would be interested in your thoughts on multiple entries and signals. At this time I only use upto 3 fractals for entries and add ons, but only adding contracts if the risk is less than 1% combined to the green line. BW and JW never discussed position sizing so I am always interested in what others have come up with. I also usually wait for 1% profits before I start adding.
    Thanks again,

  6. Hi John

    Adding on is a topic that needs a bit of discussion.
    There is one way of adding on that I would call the Gunshot Approach. You just add on on every fractal. this could be quite difficult to negotiate given the highly volatile nature of forex. Another way of adding on is what I call Webbing. I wont talk about webbing here, but my God its a great way of maximizing profits. We have a little funny terminology. We say Webbing is an extremely profitable way of trading but it requires Martian Technology. I shall one day, hopefully, discuss what add ons do I love to take and what Martian technology do we need.
    However, up to three fractals/AIMS Levels with sufficient distance between each entry is something that we/I do as well. And we kind of agreed that this is something that the human mind that cope with. I know the rest you know better than myself. Thank you for commenting. Looking forward to conversing with you more. cheers

  7. Green, this reminds me of Danny Green. One needs his heart to trade webbing! (Just Kidding, Great Movie though)

  8. Imran, thanks for the updates, keep up the good works, aw be on the look for AIMS EA trade management.


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