tions of both the entry and the exit signals. In other words, you can-
not isolate an exit from the conditions
that cause a position to be
initiated. There is a more complex set of interactions between the
various elements of a system rather than just a single component.
Since it is a more complex system,
you are less concerned with
the edge of an exit than with its effect on the measurement crite-
ria of the system itself. For this reason,
it is better to measure the
effect of an exit on those measurements which matter most rather
than simply by looking at what happens after the exit. Furthermore,
when you are looking
at entries into the market, you are indeed
concerned with what happens after you enter, since that is the
period in which your money is in play.
Traders make money only
when they are in the market.
Exits are different. What happens after an exit does not affect
your results; only what happens before the exit has an effect. For
these reasons, you should judge exits on the basis of how they affect
the performance of the entire system.
Trading with an Edge
•
73
