Early exits are killing me.

Quote from Instant Karma:

*stops too tight is FEAR of losing money

*jumping out too soon is GREED
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For me, they are both fear. The reason jumping out of a winner is fear based for me is that I've had enough entries go my way a bit, before turning and racing to hit my stop. Therefore I exit a winner way too early out of fear that my target won't be reached and I'll lose money (again).

By the same token, I've had plenty of trades go my way by a significant amount, but greed wanted to milk out more of the trade. Of course the good winner eventually reverses and stops out and continues to go the other way. So again, fear of past greedy experience urges me to close early.

One trick I used to use, and have been thinking about again, was every time I wanted to exit a winner before my (reasonable and obtainable target), I would move my stop up by a tick or two. Kind of an anxiety-based trailing stop.
 
Quote from Instant Karma:

seems to me you're looking for a qwick fix in the chart or your system... to me it's all in your head...
i know, i have the same problem, like many other traders...

*stops too tight is FEAR of losing money

*jumping out too soon is GREED

solution:

*a complete indifference to money

*the willingness to trade well regardless of anything else

*outgrowing fear and greed through hard work

hope this help
ik
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It is much better to have a comprehensive solution to all these underlying problems. The theme of the thread is really just a statement of symptoms.
 
This is becoming such interesting thread. Thumbs up for all contributions made.

I would like to share one simple method that I have successfully used years ago when I was trading equities, on how to be more indifferent on loses and letting winners carry on. It might not seem like a scientific method, but it sure did the job for me.

I used to trade KLAC a lot, with a default size of 5000+ shares. At some point during my trading career I have found myself with the same problem as FTrader; Stops were way too tight for noise and profits were too small compared to potentials larger profits.

What I did as a change, was to look for stocks that moved in exact correlation with KLAC. (most SOX do), and start trading 1000 share lots for each instead of sizing up in ONE.

This allowed me to look at each stock very indifferently. 5 cents moves against me no longer seem as large of a threat. I was able to see a much bigger picture, hence, able to respect my own initial stops and move up target profits when the time comes.

It broke my psychologic barrier.

Find your comfort zone,
Hope this helped

:)
 
Quote from Salzburg:

Thanks for your reply. So it sounds like 3:1 in a trend-following context is a real possibility. That's going to be helpful as I move forward because I'll know I'm still on the right track even if I run into 6 losers in a row.

Sure...if you keep your initial stop small, you can make 3 times in return. Bear in mind, this is just my approach and some others. There are plenty of great traders who go for the 10 bangers.


But if you don't mind, let me raise another question. My observations so far show a) a good
number of unprofitable trades -- some are breakevens which makes the percent unprofitable somewhat easier to bear, b) a couple of 3R trades where I get my 3R by the skin of my teeth and have no regrets that I'm flat again, and c) one or two 3R trades where I think what a shame to have taken 3R off the table: "Man, you coulda had 8R, but now you're gone." Do you have any thoughts on that?


I have plenty of losers during the day. Like I
said, I hit about 35%. I'm not breaking any records for winners versus losers. But, my win/loss ratio is 3-1, so I'm making money.(knock on wood). I know what you're saying about missing the big ones. My thoughts are, that not every trade is going to the moon or down the sewer. If I risk $100 and the market gives me
$300 back, I take it and look for another trade.

As for your .png, I'm intrigued by it: What made you pass on the retracement that occurred between the two you marked? Didn't dip down far enough? I guess I'm projecting my own issues onto your chart. Some of the big questions in my mind are: how much retracement is enough? How much retracement is too much? That kind of stuff. (Too many damn questions? Sorry.)


I passed on the middle one because it only pulled back 5 ticks. So, resistance was only 5 ticks away. I want a pullback of at least 7 or 8 ticks because my average loss is around 2 ticks. And, I want at least 7 or 8 ticks on my winners for an average profit/loss ratio of around 3-1 or better.



I'll attach an example of a nice trade I had today and what my strategy was.


I've got " Methods of a Wall Street Master" coming in via inter-library loan. Thanks for the tip.
Interesting Greenspan article, by the way.

Great!
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Attachments

Quote from RAMOUTAR:



Great screenshot
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Thanks RAMOUTAR...glad you liked it.

I would like to add one more comment about the 3-1 thing. I might have confused some by saying "If I risk $100 and the market gives me $300, I'll take it" and then saying "My average loss is 2 ticks, so I try to make 7 or 8 ticks profit."

What I'm trying to say is:
If my average risk is $100 and the market gives me on
average $300, I'll take it.


I guess the key word here is average. I don't always
lose exactly the same when I'm wrong, nor do I make exactly the
same when I'm right. But, my average profit over the long
term is 3 times greater than my average loss.

So, for example. Let's say I'm trading a 2 lot on the ES. My average loss (2 ticks) will be about $60 including commish. And my average profit (8 ticks) will be about $190 including commish. And that's roughly a 3-1 ratio.

Sorry for the confusion...
 
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Quote from lsudaytrade:

FT,

What kind of volume are you trading?
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I trade in 1,000 sh. lots, and on average, make 4-5 trades in the first hour. Then I'm off to work. I trade for about 25 min. over lunch and make another 1-2 trades. So, at most, I trade 7K sh per day (round-trip)

-FastTrader :cool:
 
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