Shifting mindset: Pennies to postions

Discussion in 'Strategy Development' started by Szeven, Oct 31, 2005.

  1. Im at the point in my trading where i consistantly make money, but im no where near maximizing my positions because of my short term mentality. I started trading trying to capture the spread over and over again at a prop firm, and i did ok with it. But now, im at the point where i need to get more out of positions to make more money.

    For instance, today i punched 13k of SCH at 15.00 when it was breaking this barrier, but managed to take it out for around a $150 profit because the stock movement stalled for a while, and did not actually break out to 15.04+ untill at least an hour later. Also, i punched GLW at 20.00 and made an average of about 4 pennies on 6k shares, to see the stock run up 20.19 within the hour.

    So what im wondering is, do any of you have any advice about how i can maximize my positions more by not selling out too soon? I just cant seem to break this penny mentality. Because im only making a few pennies a trade, i also am not willing to lose more than a penny or 2 a trade and its cramping the cash i could be making. I feel like im entering good positions, im just pussying out too soon and not making the real money.

    Any help would be appreciated.
     
  2. Consider scaling out.
     
  3. The bottom line is if you want to make more, you will have to take on more risk. Its almost impossible to make the kind of money you want only risking a penny or two on a trade. There are very few times where a trade will setup for you to really size in and not feel any sort of squeeze.
     
  4. I sounds like you're just trading on emotions.


    I'll bet you don't have a written trading plan.

    You should have an extensive written plan that provides exact rules for entering and exiting the markets. Everytime the market teaches you something, update the plan.

    You should review your plan every day.

    Once your plan becomes so well defined that it works consistently, then just follow the plan.

    Don't think. Don't feel. Just follow the plan.
     
  5. When trading for pennies, feel was much more important than any sort of written plan. Pattern recognition and gut instinct made me cash.

    I think that these 2 attributes are still getting me into good positions, i just have trouble with exiting because greed and fear take over as you have mentioned.

    EDIT: Not that these 2 attributes are ALL i use to get into trades (just to clarify that)
     
  6. mnx

    mnx

    scaling in and out works well for me, but if you have to wait an hour for a stock to move a couple cents, you are probably missing good opportunites elsewhere..... (unless you trading LU with a couple hundred thousand...)

    good luck. you'll figure it out.

    mnx
     
  7. sounds to me like your scared because of your size.