Marketlife Ep 33 – Trade management: decisions and tradeoffs

Podcast-Cover300So much emphasis is placed on where to get into a trade, entry signals, entry patterns… but the decisions we make after we are in the trade are at least as important (and maybe far more important) for overall profitability. In this episode, I dig into some of the ideas, decisions, and tradeoffs that are involved in these decisions, and leave you with a few interesting ideas that might challenge you to look at the problem in some new ways.

This podcast is a departure from recent episodes because it digs more deeply into details of trading topics, and is aimed at the developing trader who is well on his or her way to having a working trading plan.

Here are the show notes:

Trade management

  • What we do after we get into the trade
  • Maybe more important than entry to profitability
    • Entry
    • Exit
    • Position sizing
  • What to consider?
    • Initial stop
    • Initial target
  • Active management
    • Moving stop
      • Trailing stop
    • Moving target
    • Partial exits
      • At profit
      • At loss
    • Adding
      • As trade moves in your favor
      • As trade moves against you
    • Pyramiding (right and wrong)
  • Most important point is that every decision has a consequence.
  • Two interesting ideas:
    • Can you make money with random entries?
    • Work with a partner—divide and conquer

If you enjoy the podcast, one of the very best things you can do for me is to leave me a review on iTunes here.

Also, if you like the music for this podcast, then be sure to check out Brian Ashley Jones, my friend, and a fantastic singer-songwriter.

Enjoy the show:


Adam Grimes has over two decades of experience in the industry as a trader, analyst and system developer. The author of a best-selling trading book, he has traded for his own account, for a top prop firm, and spent several years at the New York Mercantile Exchange. He focuses on the intersection of quantitative analysis and discretionary trading, and has a talent for teaching and helping traders find their own way in the market.

This Post Has 3 Comments

  1. Oleg Foight

    Adam, this is an excellent podcast episode. I really enjoyed it!
    I’ve been thinking a lot about trade entry and initial stop placement. And there is one thing I’ve been thinking about, which I don’t think I’ve ever heard anyone talk about.
    After identifying a basic pattern (a pullback for example), and after determining the initial stop, I will only enter the trade if the market trades much closer to the “initial stop” as opposed to buying in the pullback formation and/or buying a breakout of the pullback formation. Thus making the losses less than 1R.
    I think the argument against doing this can be that it alters the probabilities and not in my favor. But… if a pattern is identified and the initial stop is always respected to “let the trade work”, then why not just wait to enter the trade much closer to the initial stop?
    It’s something I’ve been experimenting with in my own trading and like anything else, it works until it doesn’t 🙂

  2. Beau

    Adam, In regards to entries, I was wondering your thoughts on a scale in plan which works in accordance with a trigger. For example, entering 1/2 at your predetermined entry point, then toward the end of the day either add the remainder or close the trade off depending on whether the entry trigger critera has been met (strong close, weak close). Obviously, the pro is you are losing less if the trigger is not met, the con being you are getting a worse average price. Thoughts? Thanks and great episode!

  3. Andy

    That was extremely helpful, thank you

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