There is so much gold in this thread. I really liked the analogy you made with closing short gains: tons of facebook likes. Closing short losses: feeling like a loser, and dragging out losses: not feeling like a loser. I experienced this myself, a couple of days I did EXACTLY THIS with some trades that went against me. First, I got into a trade that looked like it could go to the upside, but I got whipsawed a few moments after opening and closed right away at a small loss (which was the right thing to do; the position went waaay lower) and felt horrible. I still don't like that I did it. But just a few days prior, I let a loser become way too big (relatively), and dragged it out for way longer than I should have, until finally closing it. Although this latter loss was much bigger, it did not pain me as much as the first one. Which is completely stupid: I am basically chaining myself to have a negative expectation in the long term by letting small losses become big losses... But, well, practice helps see where my mistakes are. By the way, you mentioned this above. How do you approach this? I also saw in another thread that you have someone do some data analysis for you. I guess this is also a way in which you create your own technical analysis "tools", right? I am currently doing my study in Econometrics (Quantitative Finance), so I have some familiarity with looking at data, trying to find patterns and trying to see how/when they work. So, from the data analysis, you can get your own "signals". As in classical TA, you use this signal to see where a trade might be made, but you still need to factor in some market understanding to finally pull the trigger... Is this somehow similiar to the way you do analysis in your trades? Any advice in how to approach this? Besides, you know, practicing a lot?
thanks the psychology behind winers and losers is an entire book in itself and i would say that you cuold get a baseline for how people feel abou gains and losses based on how they really feel about money or what the objective is for trading. I have alwasy found that when i am taking deep losses to feel good that I am afraid o ftaking small losses because it makes me feel like a failure. but that is coutner intuitive to what good trading should be. what i mean is that we have baiscally supercomuters at our desks right now that can do almost anymath you tell them too and we have statistics market statistics that can be incorporated into indicitators outside of just prices and baskets and indexes. bu teven then it is still a best guess scenario for me over the years it has been my ability to trust the mkt to sort of understand what i sout of whack and what isnt even with just an eyeball of a daily or weekly chart. i may not pin point exactly who but i can tell you without a doubt when things are un natural with the mkt moves and that i swhen i slowly take contrarian trades. quantitve modelling is a very crowded space and getting more crowded and I am starting to see more of hybrid maket between the 2 than anything. sure you can run data etc but not really knowing what phase the mkt is in can wipe out a lot of that nu,kber crucnhing and lets be real outside of some really great math most at home guys are runnign the same nubers and seeing the exact same stuff. right now from i have seen today the buy points the sell points and some stuff on my screens proprietary signal generation based on multiple latent inputs I see the mkt the nq catching a bid into the close
i was watching a show on amazon I am long nq by the way pretty large here anyw ay it was the exo cahllenge like 60 0kn of biking sailing mtn climing codl water submersion and navigation thru the jungle and it was interesting to watch the different teams work together and see them mostly under stress and it made me realize that yes each team had strengths and wekanesses but really they all base lined once things went wrong. Team got lost. so what did they do? instead of just back tracking the same route because remember they just got lost!! they decided that oh yes all of a sudden a short cut thru the jungle is a great idea to make up lost time and this is right after they proved to themselves that they cannot navigate. sound familiar. you are in a loser and you add to it!! i mean 90 % of the time these teams who try short cuts ended up losing even more time and then they were in a dmaned if we do damned if we dont.