It's just as stupid to give back all your profits as it is to hold on to a losing position. Both are equally stupid. And this quote of yours: "do you stay committed to the position and hope for it to recover for even higher highs." No good trader ever "hopes" for an outcome. The second that word is muttered, the battle has been lost.
Oh yes, indeed, they do hope. The term "hope" I define as sitting through an adverse movement because there is not enough evidence for closing the position, despite seeing some degree of threat. So you are unsure of what to do and simply wait and see. For example, I am long since end of August with several ES contracts. I could have been shaken out by the downtrend in November but I was not stopped out. I could have been shaken out by the Egypt sell-off on January 28 but I was not stopped out. I could have told myself, "nah this is it, the top is in". Instead, I decided to stay committed to my position and hoping turned out to be a very rewarding proposition eventually. If you are a scalper, Maverick74, then obviously every little tick might be a threat to your position. My focus is the big picture as SymTrader pointed out.
I'm not trying to be a pest here so let me leave you with this. In my humble opinion, you need to have a set of criteria in place before you even enter the trade. This criteria could be very broad and wide on purpose but you need to define how you are going to exit your position if you are wrong and how you are going to stop yourself out if you are right. The fact that you had to mentally think about what you "should" do during the Nov selloff and the so called "Egyptian selloff" which was like 10 handles, shows me that you are prone to emotional decision making. You need to define your exit rules even if you are in a "big picture" trade. Like I said these rules can be very liberal, but you need to have them. Trust me, over the long run you will make far more money and even, you'll be more emotionally stable not having to "worry" every night over news related events.
Strip out every stimulus, QE 1&2 and the rest of the trillions in monopoly money from this market and you would be lucky to be anywhere near SPX 700, I have no clue why the bulls have to defend this market that's run up on nothing but hot air, these are asset bubbles you fools, Bubble ben bernanke is doing exactly what greenspan did in 2000-2002 when he took rates to historical lows to push the economy from the brink of a recession. Is this time really different, hahah, you may think so, but its not. If this economy was able to grow organically without the stimulus put forth and easy money policies I would be extremely bullish, but when you have the market being pushed higher through POMO operations and trillions of dollars how the fuck can you call that a real economy. The GDP of 3% is not real, its being pumped up through stimulus to make it look like its growing, its an illusion. Bubble ben bernanke has officially started next crisis and were not even out this one yet. haha
Actually I trade very systematically according to strict rules with regards to entry and trailing the stop. But admittedly I observed the market carefully and was very close to getting stopped out in both instances. I had to battle with myself for not doing anything premature
You're an idiot. A truly bizarre person with no common sense. The world left you behind, probably after you wiped out your trading account in 2009.
If you haven't seen this here you go, Bubble ben bernanke only knows how to lie and he is doing that right now by telling all that inflation in under control and that the economy is stabilizing, blah, blah, blah, blah, this is the fool who was saying at the peak of the markets and economy that sub prime mortgage wouldnt be a problem and that it was well contained, he even ignored the threat of a recession. <iframe title="YouTube video player" width="480" height="390" src="http://www.youtube.com/embed/9QpD64GUoXw" frameborder="0" allowfullscreen></iframe>
Maverick74, you could be an extreme scalper, day trader or even multi-day swing trader, in which case I can understand your aversion towards anything other than the charts. In fact, I never watch the news when trading in these time frames. The point I was trying to make is that, I believe position trades, where you want to ride a trend for as long as possible, can benefit from a bias or commitment to that trade idea. Committed or not I, of course, trade with stops. So there is no question of âstaying in a bad marriage for years and yearsâ. (BTW, do you know of any marriage that has succeeded without some degree of commitment?) When you enter on a trade idea, as opposed to just a chart pattern, there will be differences in how you manage the trade as many of the sacred rules of trading get bent. For example, your initial stop loss point will likely be wider than normal, you will probably be willing to see a profitable position become a losing position, and you will be willing to hold through deep pullbacks---all provided your trade idea is still valid. The stop loss point has to be purely mechanical, but the profitable exit may be purely technical or discretionary depending on the particular trade. All this, of course, is the theory. Whether or not one can pull it off, is another matter altogether. I just happen to think that being committed to a trade idea makes it a little easier to get on and ride a trend. In this regard, I find Palatineâs reply refreshingly honest and humble where he says, âActually I trade very systematically according to strict rules with regards to entry and trailing the stop. But admittedly I observed the market carefully and was very close to getting stopped out in both instances. I had to battle with myself for not doing anything prematureâ.
You guys are assuming there is only YOUR way to trade. Without taking into consideration how there are 1 million ways to skin a cat in this game. I am not calling a top nor a bottom and you guys may be the best traders on this board for this matter, but there is certainly different ways and time frames and pain taken that traders can make money with. With your price action analogy Paulson would have never had the BEST year a trader has ever had in the world of making money in the market or Mike burry with his 700% return . They certainly went agaisnt price action. You guys are applying your risk reward and time frame and method to other participants in the market....just saying meng... I know the point you are trying to make though and your words are great advice. I am also not defending the 500 top calls which are made here daily..
Performance All Trades Total Net Profit 38.12 Gross Profit 48.47 Gross Loss -10.35 Commission 0 Profit Factor 4.68 Cumulated Profit 38.25% Max. Drawdown -3.67% Sharpe Ratio 0.59 Start Date 2/16/2009 End Date 2/16/2011 Total # of Trades 15 Percent Profitable 46.67% # of Winning Trades 7 # of Losing Trades 8 Average Trade 2.28% Average Winning Trade 6.10% Average Losing Trade -1.06% Ratio avg. Win / avg. Loss 5.75 Max. conseq. Winners 2 Max. conseq. Losers 3 Largest Winning Trade 11.50% Largest Losing Trade -1.82% # of Trades per Day 0.04 Avg. Time in Market 21.53 days Avg. Bars in Trade 14.9 Profit per Month 2.65% Max. Time to Recover 48.00 days Average MAE 1.18% Average MFE 4.58% Average ETD 2.29%