(excperpt from log) putting some thought into why and how i have been handling losers and tough situations so well, trading out of them for flat or profit and avoiding the fiasco. what am i doing differently? for example today i felt in control for the most part up until the end where i was feeling it slip, although i was not going to let it get any further out of hand, i was at my limits. a lot of what i do different now when, i.e. i get stuck in a squeeze or a rough spot, i dont add right away, i used to be tempted to add the first move against and every 10 cents after that, instead i show patinece, see wht its goign to do, read teh tape, loof at its group, what are the spoos doing, etc.. then strategically add when appropriate. however i was reminded of a pertinent instinct i feel i developed. when i started trading, countless times i paniced and sold or bought the top/bottom... like a lab rat getting electrocuted enough times, the relevation came... one day i sold a long for a big loss and recognized my panic and it clicked that i paniced and the light went on, and i thought, i have seen and felt this enought times this HAS to be close to the bottom if not the bottom, i immediately boughth back 2x as much and it was the dead bottom of the day, made a nice trade... i now listen to my gut and instead of a panic, i "feel" its close to a bottom/top along with the other signals and how the tape looks of course... this has even turned into a trade signal for me, when i get that feeling, i double up and it works more often thatn not. its also a good "safety device" saving me form panics, but i dont know if this is a posiitve traders instinct helping me or am i playing with fire here and subjecting myself to risk, i'd liek to think it s the former because in retro its always easy to look at the trade and say why didnt i get out, and thats the first line of defense to cut that loser immediately and even on the best day ideally that cuts 90% of losers, but b/c nobody is perfect, how i deal with that remaing 10% can make the difference on the day... or maybe this is just my personal head game, but would love to know a seasoned succesful trader's perspective on this if i am developing into a trader or playing mind games with myself.... bottom line is i am making more money and avoided more losses b/c of this and i think that bottom line is true test.
i have learned not to add to a losing position. I would rather lose the day than to give back gains for the whole week or month. Havent had a big down day since.
The best thing to do imo is to get out early because you never know why it's doing what it's doing. War trading can be a bitch. The real point is that the trade is out of control and your trying to regain control of a trade you should no longer be in. Always be in control.
its easy to be cut and dry and just say always get out of a loser, and my point if you read closely is to always get out ASAP when you can but what do you do in worst case scenario, i.e if you are long 1000s and it gaps down 1/4 point or 1/2 point in one trade when a big block moves through? you sell at 1/2 point loss or try to manage it. it could be a great trade down there esp. if your familiar with the stock... when it comes back now you made a 1.4 or so instead of trying ot get flat... i think a good trader needs to be flexible at times. if you can get out of a loser immediately for a small loss even 80% of time your doing well, but what do you and how do you react with those toufh 10-20% times you find yourself in can make all the difference.
Personally I think the market bailed you out, it doesn't sound like you have a stop and got lucky by buying up near the low of the day. What if you double up and it goes down even further? Then you've lost even more on your first trade, then more on averaging down.