A bird in the hand Is worth two in the Bush

J

Jax

I'm hoping to get a little advice on how to mentally tell myself it is ok to stop trading once I'm up nicely on the day. Currently I trade the er2. I've been trading for about 1 year now and I'm finally to the point where I can make money, but I'm having trouble keeping it. My problem is that I can't tell myself to STOP Trading and always feel like I can get a little more.

Today I was up over $700 on two contracts after the first hour of today's market, however I finished the day flat. Unfortunately, this behavior is not common for me and need to snap out of it. Has anyone mastered this problem, any tips or suggestions?

Sincere Thanks,
Russell
 
Realize it.

Take out 7 hundred dollar bills.

Once you made it,

For each $100 you give back to the market,

Give your $100 to your friend or person sitting next to you.

You will soon be a tight ass extremely quick.

Virtual money creates courage, but it also creates lower expectations.
 
That sounds like a great plan...I'm willing to be that friend that helps you get over this problem! :)

If you are just starting to trade and develop your edge, than your goal is to trade an make money today. After that, realize when you are screwing up your plan and have the discipline to walk away, sit on your hands, or whatever you need to do.
 
Quote from coolweb:

Realize it.

Take out 7 hundred dollar bills.

Once you made it,

For each $100 you give back to the market,

Give your $100 to your friend or person sitting next to you.

You will soon be a tight ass extremely quick.

Virtual money creates courage, but it also creates lower expectations.
More...

good suggestion

I actually have had trading friends back in the 90s who either did or suggested doing just that. They kept large amounts of $100 US on the desk to make them know it is real money.

I have actually kept $1000 cash on my desk at times to look at. After getting out of aapl puts 4 points too too soon- I think it's time to put it back on the desk.

LOL

Ice
:cool:
 
Thanks all for the feedback so far...do most of you all stop trading after you hit a certain dollar amount?
 
Funny how I have the TOTAL opposite problem. I have been undertrading, and not being confident in my system.

I wish I had your problem instead, I know I could fix that. =P
 
Jax,

Everyone struggles with this aspect of trading. You just need some simple money management rules that forbid you from giving so much back but allow you to continue to go after more opportunities.

Since you are already aware of how much you are up while you trade, you need to keep tabs on how much you are giving back and have the discipline to stop. For me, I more often than not finish near my high of the day. However, I have rough patches just like everyone else where I need to make adjustments as the market changes. During these times, I give myself a down limit before I'm done.

So you are up $700 and blood is rushing through your veins out of excitement... that's good. So now, you need to tell yourself that you will risk $100 before you have to take a break from trading (and your break must involve you getting up and leaving the market for at least 30 minutes). Once you come back, you have credit for another $100 to take advantage of more opportunities. If you lose that, then you are done and you are $500 up for the day.

You can use any limit you like for how much you will give back. I figure $100 is good because that is a point on 1 contract for the ER2.

The bigger issue is whether or not you are too attached to your P&L. With myself and most guys I have worked with, this is always the case. It is the old "man, I was just up $700 and I lost $100. I need to get it back." Those last few words are what get you in trouble. Don't trade to make a specific amount and don't trade to make money BACK. Just trade to take advantage of the opportunities you are given by the market. PERIOD. Trust me.... if you ever even consider that you need to take a trade to make money back or to make a certain $ value, then you are setting yourself up for a rough road. 2 out of 10 times, you might get what you want but you will pay it back in the long run. This has been my constantly stubborn experience.

Strong attachment to the results of your trading in monetary figures is the demon that I think gets most people out of balance. Consider what you were thinking the whole time you were giving your money back and you will probably come to the conclusions I am outlining here.

Best wishes and good luck.
 
Quote from Jax:

Thanks all for the feedback so far...do most of you all stop trading after you hit a certain dollar amount?
More...

Never...If i am kicking ass, I trade bigger, and keep pushing the envelope. When you are on a run, you are on a run. There are times though, that I close out positions and call it a day when thing just aren't going right. Generally, it means that my stop has been hit on all my positions.....that is overall dollar stop.
 
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