Anyone experience this?

Discussion in 'Options' started by XM911E3, Aug 14, 2007.

  1. XM911E3

    XM911E3

    Hi everyone, I think many of us traders be in options, futures, forex.... all experience selling too early.

    I ask this because I had a few trades which I should have hung on to it but I sold too early and hence lose a potential profits.
    Few days ago, I bought CME which I know it's going to come down to at least $550 - $560 range when it was trading at around $610. I bought 20 contracts put option and guess what it came down all the way $580 range and I closed it 2 mins before market close and the next day ( 14th Aug 07 - Tues ), went down to $561 range.

    Though made a profit of about USD14,000 but could have made more if my balls didn't shrink. I missed out a potential profits of about USD20,000 by selling on Mon.

    How can this be prevented? I mean it's not a very good feeling after all.......
     
  2. No
     
  3. Without a crystal ball, I don't think that can be prevented. :D
     
  4. Hindsight is 20/20
     
  5. Profit taking is never a bad thing. But, you can use a scale out strategy. You could have booked half, and let the rest run. Or if you really want to lock it, book 75% and let 25% run. Even if you have to stop out at your entry price, you still have the 75% profit.
     
  6. You have a mild case of Confidence Deficit Syndrome. You expected CME to decline from ~610 to ~550. Instead, you got out at ~580. You seemed to have wanted the profit too badly. Maybe your sense of proportion was maxed out too quickly with a profit of that size. Try reducing your position size and hold out for the larger move while protecting your profit. That way, the profit can "ride".
     
  7. If you knew it was going to 550-560 why didnt you stick with it?

    Maybe you speculated that it might fall to 550-560 but you were taken out of your position because you were not sure it would make it there and the temptation to take profits was too great?

    Dont fret people have been doing that since the beginning of time.
     
  8. Tell me how you know that and I'll tell you how to stay in the trade.
     
  9. XM911E3

    XM911E3

    Today ( 15th Aug 07 ), CME trading at $541. Better than expected. But well, next time after I do my deep research and studies, I'm not going to close so early :(
     
  10. XM911E3

    XM911E3

    Ok if you PM me and teach me how to stay in trade, I am more than happy to share with you my personal studies and how I managed to calculate how I did it.
     
    #10     Aug 15, 2007