This is what I keep doing I will be long the Naz E-mini or Esz3 or the Dow end up taking a small profit then jumping in short for example eight now the YMH4 @ 10,408 and getting slammed . I have a problem going with the obvious trend and sticking to my original plans which normally would be very profitable. I am also long the DFX4 dollar index @89 and sitting. This is a waste of time and money! What am I thinking?
sounds like you're in a hurry to place trades, not wanting to miss a good move, instead of waiting for the market to develop. Patience grasshopper.
Then again,...... since this is the Psych section..... you're feeling guilty taking money from some poor slob and feel compelled to give it back with interest.
You probably know this already but exiting a winning trade early is fear of it turning into a loosing trade. Sitting on a loosing trade is fearing as soon as you exit and take the loss, the market will reverse itself and you took a loosing trade that could have been profitable had you been more patient. Coupled with the agony of taking a loss period. Work on entry and exit signals. Don't risk more than feels comfortable, in fact think about reducing the number of contracts you are currently trading to alleviate some of the anxiety.
I used to have the same problem. Solved by writing down strict rules for entering reversals. Bascially I won't play a reversal now until after the second failure. Many times there are three or more failures so it's not like i'm late. And it's sure nice not to rack up them losses.
Basically there are three trading emotions, all working against you (fear, greed, hope). Hope works against you when you are in a loosing trade. You don't survive long until you at least put in rigid stop loss rule in your trading plan and adhere to them. Fear causes you to exit early. Best solution is switch to the "adding to a winning position" mind set. You have a winning trade, where will you add on? Greed causes you to think the market will run your direction forever. You must combat greed with a profit taking plan. Either A) targets or B) Time (e.g. exit on close in a trending market) C) trailing stop or D) some combination of A or B with C. As to why you enter countertrend when you exited the trend early - you are mad at yourself and you are trying to take out your anger on the market. Same way people will be angry at themselves and yell at the people around them. You want the market to give to you what you couldn't do for yourself. Best way to counter this - 1) Realize you have this tendency (we pretty much all do - though I conquered it in my human relationships long ago, it took a while to recognize and conquer it in my "market relationship.") 2) In trading don't be afraid to jump back on the trend, even if you lost a few points of the trend by premature exit. Think of it as part of your first trade. 3) Even better, exit only part of your position with a target, and use a trailing stop on the other part. Then when you realized the trend is continuing, it is easier to add more positions. Part of successful trading is the painful process of self examination. Why did I do that? How can I stop? You are on the right track by asking. Good luck. mBear
Here is my summary of the 'Phantom of the Pits' writings. . <img src = "http://www.elitetrader.com/vb/attachment.php?s=&postid=403453">
I like the pop writings, agree this is a valid summary. His "rule 3" was obviously one he struggled with and what he finally came up with didn't help me as a daytrader. Since POP's trading methods have a profit area, he didn't make it a rule. For me, a trailing stop becomes an essential part of Rule 3, since it is fairly emotionless.