How to sit on winners

Discussion in 'Trading' started by gifropan, Feb 1, 2010.

  1. I would be grateful to any one who can help me with this aspect of trading. I often have good entry when putting on a trade. I enter in the direction of the trend and most of my trades show a quick profit. What happens when the market starts to hesitate and comes back a bit ( I am sure you all know what I mean) and stalls for a period I jump out only to see the market continue to go a lot further in my direction. To compond the problem I re enter in the same position after what I see a correction higher up and that is when I get stopped out. The net result is that the price i get stopped out at is a lot higher than my original entry but I end up either breaking even or loosing money. I find it very difficult to sit on a trend and not to be swayed but ebs and flows in the market. My trend indicators remain intact. I know it is fear that causes this but how can I fight it?
  2. If you base your trading on trying to "time" the mkt perfectly, then you'll invariably be prone to intense fear (as your expectation is to be in the money immediately and stay that way). If that doesn't happen exactly as planned, you get very nervous and then fear takes over instead of rational decision making.

    My advice is to forget about perfect timing and focus on "being right". Meaning your on the right side of the actual move and don't concern yourself about the minor shakes and quick fluctuations. Cover your P&L and just focus on where price needs to go to validate or invalidate your trade.

    If you find yourself consistently affected (negatively) by these shake outs, instead of stopping, add more. This is ONLY if you have a solid structure and are just being scared out of trades arbitrarily. Use these situations to your advantage. If your system is good, not only will you be able to hold for the real move, but you'll have a larger position and a better price. A minor shift in thinking can bring about major results.

  3. 1) Reduce your original position size.
    2) Add more money to your account
    3) Focus on taking your signals as they come about, based upon your own self-designed rules.
    4) You may be better suited to shorter-term trading instead of longer-term oriented trend-following.
    5) Instead of focusing on only one trend at a time, try to incorporate multiple time-frame trend analysis in your work. You may find a better time frame to use for your trading instead of what you're trading now and develop better stop-order placement. :cool:
  4. Do you want to know the specific errors you continually make?
  5. If your entry is numberical and unambiggerous, you can code it and backtest for the optimum profit to take. System trading with the odds as revealed by backtest is the cure for all trading ills. You may never even catch a cold again, it's so efficacious.
  6. Post up a few graphs with your entry and exits marked so we can do some Monday morning quarterbacking.

    We just might be able to show you what you ought to be focusing on to help you make money.
  7. lol I love these two new words!

    and then to go on to spell "efficacious" correctly, really put a smile on my face. :D
  8. spindr0


    What's wrong with most of your trades having quick profits? Book them and look for more positions (don't re-enter).

    Orrr, scale out. Take some profits on the initial correction. If the underlying continues down, stop out at least by breakeven on the balance. If it reverses and heads back up, no problem.

    Trading involves losses. Good trading involves keeping the losses small and either having lots more small winners and some occasioanl larger winners. Forget about perfect trading. Take what they offer.
  9. spindr0


    You've never heard of the Science of Numberics???

  10. samus


    I concur, in part, with what R. Raskolnikov posted. I have no idea what kind of trader you are, your type of trading, so I'm wagging it, but based on your post... you are trading with fear -- scared money.

    You can have the best system in the world, but if you trade with fear, you'll limit your success.

    Determine the bias for the day (long/short).. take a position with what ever indicator you use, stop it out if it breaks your rules, otherwise, hold on and let it ride. Trading should be boring... turn off CNBC, pundits, etc, they don't know jack... book your profit for the day and go do something else.
    #10     Feb 1, 2010