“I have been working with your system for a year now…”

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Hi Mike,

I have been working with your system for a year now. One of the final things I’m struggling with is when to exit a trend that starts to reverse.

Hypothetically, I identify a buy signal from an end of day high compared to the last X end of day highs.

Over the next week the trend is up past 1.5 ATR. I add another contract. Over the next four weeks I add another four contracts. As I understand the system, no additional contracts are to be added after five 1.5 ATR increases, or contract additions to the initial entry contract.

Over the next two weeks, hypothetically the trend reverses and moves downward. This results in giving back 2% in gains.

What would be your recommendation? Or, better, with the system I have come to believe in and followed what is the rule to riding trends, but not giving gains away. Want to add, I’m looking at a case five contracts have been added and as I understand the rule is we don’t add more than that.

Thank you for your time and continuous contribution.

You have truly changed my vision of what can be.

Darnell F.

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Filed under Trend Following