Getting out of trades too early

Discussion in 'Psychology' started by halfwaythere, Dec 2, 2013.

  1. Visaria

    Visaria


    You must write a book, NoDoji! :D
     
    #21     Dec 20, 2013
  2. I ride winners all the way and add and trail stops, sometimes, many gnomes, my winners turn losers.only such times I hope I am not max pyramid.
     
    #22     Mar 4, 2014
  3. Very good post!

    Something I do to make it easier to follow my trading rules is to look at my equity curve over time. Sometimes it ticks down a bit, but then recovers. As posted above, you have to feel comfortable with a loss and not get upset, but also not afraid to stay in a position if the predefined rules say so. In my experience, looking at the larger time frame of your equity curve will make it easier to hold on to your short term trading rules .
     
    #23     Mar 4, 2014
  4. Visaria

    Visaria

    Thanks, but I think your offer has finished (1st March 2014 was Saturday) :D
     
    #24     Mar 4, 2014
  5. Visaria

    Visaria

    wrong thread for your spam, btw
     
    #25     Mar 4, 2014
  6. me1969

    me1969

    Great post, thanks for sharing, NoDoji.

    What I like to add is reframing as a way to escape this compulsive behaviour of taking profits too early (often due to loss aversion).

    After I have entered a trade I see only the potential loss which I like to avoid by trying to take control over the trade, which often means scratching the trade for some ticks even if it is still valid. The frame is: You are now in a trade and you have the control. This trade is dangerous, you are responsibel for not losing and securing any profit you might get. Therefore I see only the risk in form of a potential loss.

    Reframing:
    I like to see every trade I enter (with a valid setup in the right context) as a rare chance to take a profit in the market over the long run. But this chance is no free lunch. It costs me a potenial loss in the form of risk. I accept this risk and know I will make it as small as possible in the form of my SL. But I focus on the rare chance to take a profit. I will foster the trade as long as it is valid and I will minimize my risk as the market goes in my direction.

    I also visualize the trade as a prey which I have caught. The prey now tries to escape (seeing some heat in my trade), but I will not let it go as long the rope holds (as long my SL will not cut it). I know I will not get every prey and sometimes I have to buy a new rope but I will not let it out just because I am afraid my rope could burst.
     
    #26     Mar 4, 2014
  7. NoDoji

    NoDoji

    Beautiful! I too found/find myself thinking of the potential loss first (because it's always drilled into our heads to manage risk above all) and quickly reframe my thinking to focus on the net gains inherent in the plan, which is based on series' of trades, not individual trades.

    I used to keep a copy of a typical spreadsheet analysis on my desk and look at it prior to the start of trading so I could remind myself that 80% of the profitable trades retrace at least a little bit after entry .
     
    #27     Mar 4, 2014
  8. I have this problem.

    The angel on my shoulder tells me this is just a normal phase that happens after a losing trader has finally become consistently profitable, and the next plateau will be obeying the calculated target or trend following sell signal.

    The devil on the other shoulder constantly accuses me of gambling with money I should put in US Treasury bills, so I should never have been invested in the first place, and should get out before I lose everything.

    My weak carnal mind reconciles this debate by following the buy setup and taking profits at the first sign of victory.

    :eek:
     
    #28     Mar 4, 2014
  9. ____________________________________________

    Wow, you look so uncomfortable trading.

    For me, I can hold a position for days or weeks. I have a heart attack if I traded like that.
     
    #29     Mar 6, 2014
  10. I have a definite stop and I can shift my stops to trail profit.

    I can ride a profit into a loss, but I can ride a loss into a profit, so long my stops don't get hit.
     
    #30     Mar 6, 2014