When you get back to even - quit?

Discussion in 'Trading' started by jem, Jan 17, 2007.

  1. jem


    When you start the day off in a big hole and you get back to even should you get out of your winning trades and call it day. Or let them roll.

    In the old days I always got back to even first to reassess. But I do not have the plethora of good entries that I used to.

    So today I had two nice "big" trades that got me back to even and I got out. Both would now be really big winners had I held on.

    so i think I know the answer but I though I like to hear some input. (Just putting in a relatively tight stop rarely works for me so a proper stop would have given back significant profits.)
  2. I take it and try to start over, the feeling of being able to break-even and not taking it (only to see it disappear) is worse for me than missing out of the continued move. I guess doing a % could be a compromise but getting green is good
  3. This is one of the most common psychological problems in trading.

    At some point I came to the conclusion that day trading should not be viewed within the scope of a single day (or session). Even if you get to BE and decide to quit for the day, the next day's trading offers new risks and rewards. You could just as easily lose money again.

    If you have a signal, stay with it until it is no longer valid.

  4. Lucrum


    Historically I've always been in a hurry to get back to BE. I guess so I could get out and take a bid sigh of relief.

    I read somewhere though that trading isn't really a BE game, you have to do better than that. So now I tend to keep trading just as if I was never down to begin with.
  5. When you're in that situation, you have to ask yourself: are you trading to break even for fun, or are you trading to make money. If you have a trade, and nothing has changed except the best entry price is different, stick with it.
  6. I know it's tough to do, but it's best if you don't imagine any hole at all, what's done is done, it's all in your head.

    If I could say every entry and exit I make from now on would never hinge upon or be influenced by what my p/l was, I'd be 10x the trader I am.

    But practically speaking, one rule of thumb I keep is that if I ever take or adjust a position that was purely based upon an attempt to get even or recover p/l, the stop goes to even once it's there. There's a part of me that really doesn't want to reward that kind of behavior, I'd be better off if every attempt resulted in a nice fat loss. :)
  7. If your turkeys have all wandered back into the trap, pull the string and sell.

    The risk is that they'll wander right back out.

    That's my psychological tendency.
  8. The outcome of every trade is random. If you have a positive expectancy system, over time you will come out ahead with proper money management rules. So if every trade has a positive expectancy, why would you not take every trade setup? The market does not react differently based on your p/l.

    Ignoring P/l and money and trading only to trade well is the #1 thing that will take a good trader and make him great.
  9. jem


    Hi lescor.

    I agree with what you said to an extent.

    However I am a discretionary trader. And the distance the trade goes in my direction gets more random as the trade goes away from my entry. I completely expect a bounce in my direction within just a few ticks. I almost always get the bounce. the question for me is how long should I hold and should I move my stop to break even.

    My money is made because my entries take very little heat. My profitablity comes from my exits.

    so as trades get further away from my entry - they are more likely to have some sort of pullback. I agree I should think about the money less however the money and ticks in my direction are usually very similar.

    Also while you have hundreds of orders sent out. I never have more than 3 positions on at a time in my daytrading account.
  10. While there is a technically correct answer, trading is done via psychological mediums (humans trade psychologically, period).

    If you have enough knowledge/experience/recordings etc., and it is more intune with your personal financial situation (in other words, it fits your psychological profile), after being in the hole you should quit when you get back ahead.
    If on the other hand, you can withstand a hit (even major) and not blink, because your experience has shown you that there is a great likelihood that you will probably make that back double in your next trade (and it fits your financial situation in life) ... it just won't matter, take the next trade that comes along and setsup properly according to your criteria, and the next and the next and the next.

    For the record, I believe that at least 80% of all traders would quit when they're ahead, have a beer, and come back to play another day.


    #10     Jan 19, 2007