Fear of loss of profit

Quote from stock777:



True. But that's the hard part. 'A Reason" implies you can accurately measure the length of the move. Being right about direction is considerably easier than being right about the magnitude of the move.

So, if you're up a 1/2 point, do you want to 'risk' that to make another 1/2 or 3/4 ? You may find that you are giving up your profits that way. Most remember the trades that keep going, and think the good sells were obvious and without doubt (after the fact).

That said, compulsive profit taking is a mistake and should be dealt with.
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You'd be surprised how often the minis reach their targets. And even if they do so only twice a week, you make enough on those days to make trading the rest of the week unnecessary. Wednesday, for example, was good for at least 12pts, and yesterday was good for 15. Monday was also a pretty good day, but only if you left the trade alone.

--Db
 
Words of wisdom Db.

After my entry I put an alarm on the stop and a point below the target and leave the room.
The trade doesn't need me around to screw it up after that.
 
Dantheman,
Just wondering... did you look often at the p/l $ ? Usually, I found that if I look at it too often, my greed/fear jump into my thinking.
Just concentrate on the charts, and ask yourself : if I don't have a position now, what would I do? go short or long ?

Cheers!! :)
 
I have a similar problem of exiting too early. I think it's because several of my profitable trades, have turned into a loss because I didn't exit in time (greed), and expected the stock to bounce and go higher. Everytime this happens, it totally reverses my psyche and I start taking in the profits at every opportunity e.g. make $100-200 on a trade, and exit, only to find out that if I had stayed in I would have made much more.

I'm a beginning trader, but working my way towards a good balance. I don't intend on catching the entire move...I'm just looking for a good balance.
 
Quote from Dantheman:

AGGGGH

Please someone learn from my mistakes :)

shorted QLGC yesterday @ 35.62 because based on the day and the day before's price action ....seemed to me to imply imminent support break. This was an overnight hold and I don't usually do them but I felt VERY confident about the trade (experience has taught me when I'm feeling very confident about a trade call to be more aggressive.)

(long story short) My target was 34.62, but I exited @ 35.20 and 34.95.......had I waited with a simple trailing stop I could have gotten out easily at 33.00 AAHHAHAHAHAHAHAH

The fear of loss of profit in my mind is what keeps a break even trader from becoming a profitable trader (which is apparently my situation.) not net losing but not net winning.


Moral of the story: If you have an edge (no matter what it is), be risky with your profits always because you don't have any idea when your profitable trades will become enormously profitable trades....and those enormously profitable trades will overcome the losses and still leave you with net profit.
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This is your problem...you are trading a casino chip that has no rational price movement...move on to "easier" situations!

QLCG is not logical!...It's a performance chip! (For Funds); AVOID!

The fact is that, this is a crowded stock that will keep you nervous.

Move on. Try EK 35+ last week now 30 something;, no games,
just a piece of sh*t...!

Trading in crowded situations will keep you on edge, and nervous!

David
 
Just because the stock eventually dropped to 33 is no reason to get despondent. If your original target was 34.62, feel lucky you didn't decide to say, "ok, my target is hit, time to go long." :) But that's the danger of using targets and thinking you can pinpoint ahead of time where exactly a stock will top or bottom.

To learn to sit for the big gains is not easy -- for one thing, it means that you're going to have to learn how to sit through deep drawdowns of your open profit, there is no other way. You'll have to ask yourself if your style of trading/emotional makeup is comfortable with seeing a number of decent gains returning to break-even or worse. The only other recourse is to take your profits and be prepared to re-enter the trade, with the mindset that it's just the same trade, and perhaps you could even try for a better re-entry point than your first exit. In any case, try not to trade with hard profit targets -- you want your stop-loss points to be rigid and pre-defined, but be flexible with your profits. The market always goes higher/lower than most people imagine.
 
Quote from Dantheman:

(long story short) My target was 34.62, but I exited @ 35.20 and 34.95.......had I waited with a simple trailing stop I could have gotten out easily at 33.00 AAHHAHAHAHAHAHAH

The fear of loss of profit in my mind is what keeps a break even trader from becoming a profitable trader (which is apparently my situation.) not net losing but not net winning.


Moral of the story: If you have an edge (no matter what it is), be risky with your profits always because you don't have any idea when your profitable trades will become enormously profitable trades....and those enormously profitable trades will overcome the losses and still leave you with net profit.
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Thanks for your post Dantheman.
Let the trader who has never been guilty of this cast the first stone. You don't have to worry about it coming from my hand.:D
 
Thank you dbphoenix, it seems to me that you do trade. :)

To candletrader,

i thought it was obvious that if you're a scalper you can't really let your profits run. Indeed the continually shortening time frame means you must take profits sooner and sooner until you are only making max of 1R per trade. Again I didn't mention this because I figured it was obvious except to people who don't trade. (and there are quite a number of them here).

To Stock777,

It is my belief that wherever possible one should be looking for a minimum of 1 X initial risk, preferably more than one. If you are taking profits at less than 1R, you are then risking MORE to make LESS.

Some people excuse this by saying "well if you have a high enough hit rate then it's ok". I don't believe in that. I believe good trading is losing no more than 1R and gaining 1-XR.

Therefore I must stay with every trade until at least 1R is gained. On the trade I mentioned here I did not do that. I only made .5R.

Put another way, if you are risking more to make less, you will get ulcers because you have to be right so much more often.

To Bone,

Yes the trade NEVER ONCE went against me, post market or pre market. I had no reason to get out except fear of loss of the profit I had. I was not being risky with my profits. It was irrational and foolish and I'm not going to sit here say things like "well I got out because of XYZ" --no. My target was NOT hit and the trade was in my favor = no reason to get out.

To Dojibear,

Yes I will have to somehow reduce the number of times I look at my P/L....I'm sure it was a contributing factor.

To Fasttrader,

Be in the habit of using a trailing stop on your profitable trades.


To Caracal,

Nonsense, I don't know what everyone finds so insane about QLGC. I have never had a "problem" trading it. The moves seem quite logical (barring a couple instances) and if your stop is wide enough you can catch major intraday trends in it.

The stock did not keep me nervous. The root of the problem was that I wanted the profit and I was afraid that it would "disappear" if I stayed in the trade. Combo of fear/greed.

Again the problem is a psychological issue. It is never what you trade , it is HOW you trade. You know all the people who think daytrading is so risky? Well, if you are a daytrader you know that it is not "so risky". It's a psych issue that they have.

And finally to those who think I can't trade or am a loser or something, I will let you know that I have breakeven performance. After I conquer this last psych demon I will be net profitable.

I started this thread as an educational excersise, maybe someone who didn't think it before will realize that psychology is trully the defining factor between a profitable and unprofitable trader.


Illiquid, I agree with you. The target was mearly my 1R price point. Otherwise I don't have hard targets.
 
Quote from monee:

After my entry I put an alarm on the stop and a point below the target and leave the room.
The trade doesn't need me around to screw it up after that.
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I'm not so sure about that. I've found that if you are, for example, short, it helps to root for the downside (e.g., Go! Go! Go!). Otherwise, people are much more likely to go for the upside and stop you out . . .

--Db
 
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