Cutting Winners Problem

[truber]

Thanks everyone for you insight! I really appreciate. I have lots to think about! I am going to make some tweaks to my strategy and approach and share. Its writing in Easy Language on TradeStation. I've been running it for about a year. It keeps me out of trouble if I follow it. The only tweak I need to make is my aversion to a loss and never taking a profit.

Good Trading
/truber

 

[i960]

You assume that cutting winners is a problem. It is not. Take winners when you can. I manage my winners early. The herd will tell you otherwise.

Your trading system already eats like a mouse and shits like an elephant - and now you're advocating for taking profits early? First serious risk-off event and you're done; you'll never recover like that.

 

[BONECRUSHER]

Your trading system already eats like a mouse and shits like an elephant - and now you're advocating for taking profits early? First serious risk-off event and you're done; you'll never recover like that.

Good advice and funny too!

 

[BONECRUSHER]

• Never exit a trade manually, always utilize a stop with a price-range of accepted cost of transaction (paying the spread / volatility / even lack of liquidity)
• You can do the same for purchases, thus buying on strength
• Never set a stoploss where it is likely bullish price action can stop you out, this is farther out than you can imagine but my personal limit is at 50% regardless (though PA doesn't follow this always)
• Never get in or manage a trade unless you have strict rules to follow
• It's OK to exit prematurely if you've broken your rules or act rashly. Instead, congratulate yourself for breaking a pattern.
• But if you feel confused, leave a stop where it should be and walk away (being in Nature may help even). You might be pleasantly surprised when you return, or you might gain confirmation how stoplosses are working for you.
• If you can't walk away, either you're trading too large, or you need to check your psychology, ability to follow your trading rules and proper execution
• Be happy!

The first line is a favorite...never exit manually!

 

[lawrence-lugar]

Thanks everyone for you insight! I really appreciate.

I have lots to think about! I am going to make some tweaks to my strategy and approach

Trading is an extreme psychological mind fuck game with yourself.

It may seem... Easy, while just staring at hindsight charts and casually paper trading -- but to be actually trading with your own real money...your mind and mood and personality is like in a battlefield, never calm or at ease.

The only thing I can throw in here...is to gain general market wisdom and experience...and things will start to slowly seep into your vision and head ...gain a pillar to lean on,

And no so-called 'golden trading rule' should be etched in stone -- there's Always a flip side of the coin to consider, that can be just as right,

 

[AbbotAle]

What you're learning is that taking profits is THE hardest skill in all of trading. Anyone can get into a winner, even a flip of a coin, but try flipping a coin to get out, it will end in disaster.

The problem with taking profits, coming up with a good plan, is one doesn't exist. Repeat: the perfect profit taking plan does not exist. It is always going to be imperfect over a series of trades even for the best trader on the planet. So the first step to developing a good plan is to accept imperfection.

As for how to help you? Nobody can really because everyone who has a good profit taking plan will be dealing with imperfection. Also, look around on the web, see how many articles there are re getting into trades, then look at the information about taking profits, the ratio is probably 20:1. What does that tell us? That few have any really good ideas about taking profits, it's always the same crap.

However, there is one bit of information that's very useful. Look at the character of the price moves, you'll often see it's the same. If/when price acts OUT OF CHARACTER (usually by expanding) that's your que to take profits.

 

[lovethetrade]

You assume that cutting winners is a problem. It is not. Take winners when you can. I manage my winners early. The herd will tell you otherwise.

Probably system traders that have tested systems to the nth degree will tell you otherwise.

Discretionary trading can be different.

The problem with taking profits, coming up with a good plan, is one doesn't exist. Repeat: the perfect profit taking plan does not exist.

That's a big call.

 

[java]

Or just don't take one. It's a game, you see how much you can accumulate without taking a profit. You keep playing until you take a profit. Then you lose.
Avoid profits. Don't take them. If you want to take something take a loss, but beware, if that's all you do you will end up with nothing but profits and then what are you going to take?

 

[AbbotAle]

Discretionary trading can be different.

Have you seen the long term results of 90% of the system traders? That tells me they haven't got very good profit taking plans.

 

[AbbotAle]

[QUOTE="
That's a big call.[/QUOTE]

Yes, but it's a true call.

Taking profits is the hardest skill to learn in trading and the best traders have realised to accept imperfection. Accepting imperfection is the smart thing to do because with trading we're often dealing with a wild beast. Try to make a method out of the madness with one of those.

Trading is also all about PERVERSITY. That's what makes it so hard. So how can people expect to have a perfect profit taking plan when perversity reigns supreme? Perversity works against being able to develop the perfect profit taking plan so to try to achieve it is like trying to fly. Better to realise trading is about perversity and then build that into your plan, both offensively and defensibly.