Anyone else have this problem?

[stock777]

This is a problem that is a lot more complex than it appears.

There is a delicate balance tween closing a position early ,to break even or take a loss, recognising when you have been wrong to take the trade, and panicing out.

Any idiot can take a position and let it ride way against or way in the money.

You are supposed to reevaluate the position based on market conditions, not your p&l.

This is a lot harder to do in real time than is admitted by most.

You may want to double up if it moves against you , on the principle that the entry is now even better, you may want to cut losses if you think the trade sucks, , you may want to wait and see, the list is endless.

If you can master the art of position management then you can make a lot of money.

 

[NihabaAshi]

Quote from sportstrader:

I seem to have the same situation occur daily. I enter a trade if it goes against me no problem I'll hold and have no problem being in the red but when it comes back green I sell too quickly. I don't trade with stops and will swing a loss but sell too quickie...

This literally happens all the time. Always out with a profitr albeit small but always miss the big move in either direction.

Quote from sportstrader:

...My problem is when the trade goes against me I should double down cause it always ends up a winner but I don't and I think much more rational when I'm red but when I go green I pull the trigger...

This use to happen to me in the mid-90's.

Here's what you do to verify what you actually feel or think you see...

Sit down and do some statistical analysis to determine the exact percentage or number of times a losing trade reverses and eventually becomes profitable and then continues and reaches your profit targets.

Do the same and to find out the stats of it reversing and you get out for a small profit prior to it reaching your profit targets.

Do the same when it doesn't reverse and results as a loss.

Do the same to determine your results had you double down.

Just do this year of 2006 and get back with us with your results.

Your results will be able to solicit more fine tuned advice.

If your correct via proof from your statistics, it's obvious you need to intentionally delay your entries so that you can get a better entry price.

This should be just a few hours of work for you to gather your stats and post them here for us to give further advice.

Mark
(a.k.a. NihabaAshi) Japanese Candlestick term

 

[eagle]

Because naturally we are loss averse, we hate to lose something. People will take risk to prevent a loss because loss is more painful than gain. When a trade goes against, one will be mistakenly thinking that if one closes the position right now then one will take a real loss, but in reality it's already a sure loss; and one will continue to expect that the virtual loss will be recovered. As soon as it is recovered or/and make a small gain one will be fearful to lose, or to come back to the previous painful emotion, then one starts to close the trade. If the bad trade never recover then one will continue to hold long enough expecting it will be recovered.

Almost all traders had passed this stage once in their life especially at the beginning and with time experience tell us otherwise that our natural instinct for loss averse was wrong and destructive then we need to be systematically ready to close a bad trade as soon as possible in its early move.

 

[nitro]

Quote from sportstrader:

I seem to have the same situation occur daily. I enter a trade if it goes against me no problem I'll hold and have no problem being in the red but when it comes back green I sell too quickly. I don't trade with stops and will swing a loss but sell too quickie...

...
Anyone else have the same problem?

Yes I used to have this problem. When I solved it, I went from being a losing/breakeven trader to a breakeven trader/winning trader.

In this problem and it's ultimate (re)solution is my holy grail.

nitro