The past couple of days I have regressed to using "hope" in trade management, and cost me a few hundred bucks in extra losses, instead of very small losses. It's all about accepting what's dealt to you after you get in. If you can accept what's given to you, including those small losses, then you can write a check to the IRS each quarter. If not, you can write a check to your broker each quarter.
At least, I didn't do anything like pulling or backing off stops. Or, God forbid, get into any "position trades"... heheh But I "let it hit the stop" every time in the past two days. Really what that means is, I stopped it late instead of stopping it early. Last week I did really well because I stomped them out before I stopped them out. Stops are for unlikely, unlucky events, not for closing the trade. Stomping is much better than stopping.
So why is "stomping" so hard? Because once you start stomping, you will also stomp out some trades that would have made a lot of money and never hit that stop. The way I see it, the choice is stomp out all the bad ones and the bad looking ones that turn out to be good ones, and still end up ahead. Choose only the finest trades to stay in. The only requirement is accepting that "woulda been +20 point" trade that I stomped, and still continue to stomp ever after. There is no such thing as "woulda". No one can tell the future. Indeed, I have noticed after good stomping sessions, that many times things change again, and there is a chance to re-enter. Many times at a better price than the original entry!
You have learned a very important lesson that took me two years to learn namely that even on a good trade getting out with a profit is a good thing and you stated. I have also found that you can usually get back in later at a better price and even if you don't still had a winning trade. Make notes it your trading journal as to what your emotions were at the time and the reasons you stomped the trade and learn from that.
For example, for openings in zone A, there is a 69% chance to close in zone A,B, or C compared to a 59% chance overall (a signature of the uptrend during the duration of the stats). Thus if I get short with an "A" opening, I'll be on high alert to close near the pivot, or zone "X", and reverse. I use my normal trading methodology, but I used the statistics to guide the trades. Another example-- with an "A" opening, if price falls to zone "X", but doesn't hit S1, I will avoid taking short entries. If it does hit S1, the picture changes to a bearish one: of the 11 times it did this, only twice did it end up closing in A,B or C. I expect these stats to change over time, so I am keeping track of the "all time stats" and also the last hundred days or so.
Note his test is behavioral... not explicitly tied to profit or loss... I've found this to be extremely important, for both trade management and profit-taking exits. Just about done with the book. The stuff about "how to trade" like the quotes i've been showing is great. The actual tape reading techniques (about half the book) seem less valuable. But if you read between the lines there is a lot of good advice.
As you explore Wyckoff, you'll find that practically everything you read these days in regard to trading stems from his work (I hesitate to say "copied"). Note, for example, how often what you have in bold is attributed to a certain modern-day trader.
What about the following? 1a) Doing everything wrong and making a lot of money. 2a) A mistake or computer error, beyond your control which leads to making a lot of money. 3a) Becoming immersed in the zone and making "x" months...or better, years of profit in one day.
This reminds me of an old book I think I still have (been a while) that is full of statistics like this - splitting the range into zones and then figuring out the probabilities. I wonder if the same probabilities identified in the book apply today. At any rate thanks for reminding me of this idea.