6. Exit Signals
Charles Schwab with weekly price bars and 7-day and 150-day exponential moving averages.
- Entry [L] on 30 October 1998 at $10.13.
- Exit on Key Reversal at [K] on 15 April 1999 at $44.75.
- Remaining position stopped out at [X] on 25 May 1999 at $33.13.
- Price crosses below MA150 at [Y] on 14 June 1999 at $27.25.
- 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.
|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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