Sold early and feared of riding profit into loss

Discussion in 'Psychology' started by a529612, Jan 24, 2007.

  1. Some of my big winners might show a small unrealized loss soon after purchase.

    Say I buy a stock at $ 30 / share. My stop loss might be at $ 20 / share. I have a risk budget, say $ 100. I calculate position size so that if price decreases to $ 20 / share (30 - 20 = $ 10 / share) then I only lose $ 100. $ 100 / $ 10 / share = 10 shares. My position size is 10 shares.

    I am comfortable because my risk is about $ 100, an amount that I am willing to lose.

    If I bet much more, say $ 10,000 then I get scared and worry about small price changes.

    Bet size influences the psychology of my trading.
     
    #11     Jan 25, 2007
  2. bluedemon77

    bluedemon77 Guest

    I didn't know that. So why is he so idolized, just for being the "boy plunger?" Isn't the score at the end of the game the thing that matters, not the 90 yard return for a touchdown before halftime?
     
    #12     Jan 25, 2007
  3. me2

    me2

    because he is one of the few that hit it big a few times that has put it in writing. im sure if steve cohen, paul tudor jones, etc did 'fictional' autobiograhies people would treat those like the bibles as well.
     
    #13     Jan 25, 2007
  4. asap

    asap

    yes, he is idolized because he made a huge fortune twice. he decided to put an end to his life when lost everything for the third time. too tired to start all over again , i guess. he is an idol because he captured the real essence of the trading as a profession and his teachings are timeless.

    "in wall street bulls and bears make money, pigs get slaughtered"
     
    #14     Jan 25, 2007
  5. panzerman

    panzerman

    I highly recommend that traders read The Zurich Axioms by Max Gunther. One of the cardinal rules is to always sell too soon.
     
    #15     Jan 25, 2007
  6. bluedemon77

    bluedemon77 Guest

    If that makes sense then wouldn't the correlary be to buy too early? Does he also advise buying on the way down? Same logic applies: avoiding the rush toward the door (in or out).
     
    #16     Jan 25, 2007
  7. The only thing that works for me is to put in my exits (targets, stop) and stop looking at it. Close the p&l window if you have to.
     
    #17     Jan 25, 2007
  8. Tums

    Tums

    watch your stoch and macd
     
    #18     Jan 25, 2007
  9. ehsmama

    ehsmama

    Take smaller positions, and you will be able Ride your winners.
    Rajiv
     
    #19     Jan 25, 2007
  10. PLATER

    PLATER

    I was told a few years after i first started, be happy with 40 or 50% of a move. Worked well for me. Find what works for you, another example, trail a stop, or close half. Whatever.
     
    #20     Jan 26, 2007