Rather than the usual 'losing-trade-turned-investment' syndrome, I find myself lately with the opposite bad habit: overestimating profitable positions. Once a trade goes into the green, I have a bad tendency after a time to start pulling out onto the next time frame and trying to surmise its full 'potential' beyond anything I'd had in mind when I first entered the trade. Yes, I realize that the frustration that arises here is as silly as the mirror-image of leaving profits on the table -- a kind of "holders remorse" that is just one in a long line of mental pitfalls we tend to get caught up in. But I'm finding that continually trying to hold out for more can also be more costly, both mentally and financially, over the long run in comparison. Thoughts?
(1) Focus on protecting your money, not growing it. (2) Spend some time with a freaky Latin chick. (3) Strive to be consistently profitable, not perfectly profitable. (4) Develop a way to add-on to profitable positions. (5) Brush up on your Spanish language skills. (6) Pride yourself on executing your system, not the magnitude of your profits. (7) I hope that helps.
============ Helpful problem to have ; figuring amount of profit to give back & think you are on the right ''trending track'' Actually may have a somewhat vauge idea of ''potential ''but if youre like me, likeing strong trends , they frequently go , go beyond what we think. Like the PSAR principal more than the actual indicator , which usually have on my charts; it snugs up stops. Helps protect as NasdaQQQ says. Frankly would rather get a little bit less [not much less!!!!!!!]. & not have big drawdowns ; focusing on a few stocks/derivatives can help hint of tiring trends. 7]I hope that helps.
Greed, bleed/seed, feed Its a game. Trading is a game. Its a fun thing and an absorbing challenge to learn to scoop out your 'take' from what the market offers each day (index futures, ie YM). Why greed? A great pile of money is not greed or lack of greed. It arises as a byproduct of the points you take out daily from those made available each day by the market in which you trade.
I guess I am too liberal in considering open profits as "house money" to be leveraged. I'll have to ask the wife about (2).
When I traded momentum stocks during the bubble years, I remember always taking a point or two then watching the thing go up another 5+; it happened so often that I just became resigned to the fact, and it never really bothered me. The difference today is that I now just focus on the same 3 or 4 markets day in, day out, rather than jumping on whatever's moving that session. I can't just take it off my screen once I've exited a trade; I am "always in", mentally at least, in all the markets I observe. So there is always this temptation of giving in to "not wanting to lose one's position" in holding out for the bigger trend, but I realize this is likely just an excuse for being lazy about re-entries.
Yes good point; I used "greed" for lack of a better word in describing my habit of progressively extending my profit targets the greater the position went in my favor. "Dumb" might be a better choice
Sell half your position at your initial target, then move your stop to break even or higher to sastisfy your thought of "what if" the position has the opportunity to make even more money.
illiquid, Trading is about yes/no patterns. When you are monitoring a trade and expect price to get to a higher time frame target, this requires successive yes patterns on your lower, entry time frame. If the push is strong enough to get to your bigger target, this will also mean that any pullback against your position on the entry time frame will be very short lived. A pullback is not necessarily a no pattern. One that shows strength against your position is and becomes your no signal to exit. --opm8