never letting a profit turn into a loss

Discussion in 'Trading' started by dg2000, May 31, 2001.

  1. dg2000



    Does anyone stick to this saying? Is is smart to? I'm generally a swing trader and my exits are typically between -4% to +12%. I do use trailing stops, but say at the end of the day I have a gain of 1% in a stock. Is it really smart to move the stop loss to break even? Or should I still allow a small loss just so that the stock can move more in my favor?

  2. Jeffrey


    Yes, I stick to this saying going into a trade, but market conditions(variables), at times, may permit me to stick to my original tight stop.

    Market conditions may allow me to hold a stock overnight with 1% gain, but I prefer 5%.

    Refer to your papertrading records, or start recording your experiences. You will get a feel(rhythm) for what works for you. I would like to say that I consistanty use a certain percentage, but from experience, I know certain setups, and follow through's, are more promising than others.

  3. gh2


    I absolutely try to hold to that principle. Some times an issue that i am playing will spread through the BE (break-even) point, and i will close at a very small loss, compared to the disaster stop i set before going into the trade (which is usually 0.5% of capital)

    However, i BELIEVE that there are phases that a trader goes through. I am currently cutting losses so plinking fast that i have a terrible Win/Loss ratio. I think this i a fear phase. I am working on developing a bit more mental discipline and tweak my belief structure a bit more, until i believe i will enter the next phase -- fearless trading. But again, this is just what i believe -- and it may be way out of your path as a trader.

    I still have a positive expectancy. But i think if i allowed a little bit more room i would be further ahead in the long run.

    One thing that has really changed my attitude about cutting losses fast is when i changed to an EDAT broker with penny a share commissions. In and out really doesn't phase me the way it did when $30 was on the line! I was tempted back then to hold a position all the way to a disaster stop instead of below entry price. Stupid but true

  4. dozu888


    I can't imagine people making profit daytrading while paying $20-30/ticket charges. I been at trading for more than a year now and wouldn't be consistantly profitable if not for the cheapo penny/share comm.

    I did some system trading on the emini a couple of months ago, and statistically, moving stop to break even too fast does hurt overall performance... but, the move does give you a psychological advantage, knowing you have a 'free' position working for you.

    There are so many ways to make money, you don't really need to have the statistically maximum performance to be a good trader. As long as you cut loss short and let winner run, a less-than-optimum system can have big profit as you increase share size.
  5. Jeffrey


    Ask the old timers. They paid these commissions not long ago. Now, a standard Daytrading school's ticket, $20, comes down to $6 with quantity trades.