How do you guys combat FOMO and take profits when should

Discussion in 'Psychology' started by 3acor, Jun 27, 2019.

  1. Stocks or cryptos or anything for that matter are just like a rubber band. They snap back to mean reversion. If the price is overextended, unless you are watching it like a hawk where you can ride it to its fullest, its better to sell and wait for a better entry.
     
    #21     Jun 28, 2019
    3acor likes this.
  2. MattZ,

    Good post. May I please have your opinion or feed back.

    There are 3 trade management methods using stop loss trail orders I have been thinking of using when I trade one setup.

    I need to pick 1 of the 3.

    Would recommend me back test all 3 methods to see which methods provides the most profit and go with that method?

    Should everything be quantified/proven to make money rather discretionary or mechanical trading ?

    Thank you.
     
    #22     Jun 28, 2019
    MattZ likes this.
  3. 3acor

    3acor

    I see what you mean. I feel also that we (at least me) don't take profits not just to miss out on the potential gains but also on being able and wanting to catch the whole move.

    A good solution would be that if we are up a decent amount and feel the trade isn't moving our way anymore, just get out 70-80% and let the rest ride.

    That way, we guarantee profits and if the stock keep moving our way, we can try and catch the whole move with the 20-30% left. Worst case, we get out at break-even.
     
    #23     Jun 29, 2019
  4. MattZ

    MattZ Sponsor

    You are making too many assumptions. The first one is that your method could adopt trailing stops, and that is not true for all methods. In fact, for most beginner day traders and scalpers, I find that placing targets may be more efficient.

    The second is the ability to backtest trailing methods. You must know whether it hit the Bid, the Offer or you are using the last price.

    Should everything be quantified? Again, you should at the very least run a method that has positive expectancy. Even if you are using discretionary based decision they have to based on some logic that makes sense to the volatility of that market.

    You can go on and on backtesting and retesting, but nothing will give you as much insight as real-time trading.
    I see some degree of under-appreciation of what actual screen time does and instead focus on "watching" the market as if an intuitive divine will inspire them. Real-time trading has a cost, and initially, it is very hard. But, trying to avoid error via a hypothetical model could only help that much.
     
    #24     Jun 29, 2019
    qlai and SimpleMeLike like this.
  5. SteveH

    SteveH

    OP,

    You should be keeping detailed stats on the max heat and gain every trade signal in your system took, regardless of where you actually exited. For volatility reasons, it's good enough to keep active stats for the past 20 trading sessions on a rolling basis.

    The more you know your numbers, the less clueless you'll be.
     
    #25     Jun 29, 2019
    3acor likes this.
  6. Thanks MattZ,

    You make an excellent logical comment. So I am forcing trailing stop on my method rather than also evaluating if my method is more profitable for fixed targets.

    I have been evaulating both:Trailing stops and fixed targets (then re enter with trend).

    While trading the fixed target method, I have noticed that stress levels are down, comfort is up, less decision making, I feel I did something right, I feel I made a good trade.

    The psycological part comes after the trade when I think "wow, I just risk 20 ticks to only make 10 ticks, what happen if you only trailed the winner for bigger rewards". The risk vs reward varies with changing day to day market conditioins. The logical thinking part comes in as "you exited for a profit, good work, lets get ready for another trade oppurtunity"

    It is a back and forward roller coaster of what is best. So yes I evaluate and record stats on both methods, Fixed and trailing stops. I feel this is the only way to build confidence in what I am doing, so trading because more logical statiscal based rather than "oh, I guess this will make more money, lets just do it and see" This type of thinking leads to roller coaster emotionally thinking all day.

    Yes, I agree. Real time and back testing is good. I personally spend more time in real time screen watching cause real emotions is in the game, real actions.
     
    #26     Jun 29, 2019
  7. 3acor

    3acor

    Thanks
     
    #27     Jun 29, 2019
  8. MattZ

    MattZ Sponsor

    Watching real-time quotes does not prepare you for the markets. You will learn more from one week of trading real funds than watching the screen for 5 years.
     
    #28     Jun 29, 2019
    murray t turtle likes this.
  9. %%
    That;
    + since most hedge funds[not all]lose money. He may want to study + record monthly..... trends- If he[original poster] wants to make money.As far as if he just wants to be an action addict- he may simply want to watch closing prices + closing prices on a 5 minute charts .These comments dont apply to crypto, or tulips; just stocks/ETFs+ stock/ETF trends.

    BUT WSJ did do an interesting article-bitcon losses maybe tax deductible.:cool::cool:
     
    #29     Jul 1, 2019