Fear of loss of profit
- Thread starter Dantheman
- Start date
Hey DB you can make fun all you want, but when I find myself in a play that just can't seem to get goin - I find a good ol' Caddy Shack 'gunga' chant can heat things up... And like magic...
Next time you are in a position, don't just chant ----> do a gunga chant!!!
Gunga, gunga, galunga, gunga, galunga...
You can't tell me that my magical gunga chants do not alter the state of the market...
Cool, but listen if you are to use the magic gunga chant then I advise you to get it right... It MUST be said like this if it is to alter to course of the markets...
http://www.carlspackler.com/sounds/017.wav
http://www.carlspackler.com/sounds/017.wav
db, your comment about staying with a trade rather than exiting just because it is profitable was worth its weight in gold. i agree with monee too. i had already realized i was taking many profits too soon and not accepting the potential for wiggle or for a trade to go slightly against me in order to ride it upward.... ive been working on on taking some profit fairly early to lock in a profit on a trade - this works for me - and letting the rest run. i find i need to work on re-entries at higher prices and the easiest way to do this is not exit 100% in the first place - try to let the market take me out!
nothing is worse than getting a near "perfect" entry and then exiting too early (well, almost nothing). i just started watching don miller's QQQ tapes and he points out that if he had daily profit targets (to stop once hit) he would not have made the bulk of his trading profits.... i think db's comments are in the same vain, although others will disagree. he also supports taking some early and scaling out of positions.
i'd suggest that if someone is closing positions simply becuase they're profitable, then scaling out of a position is not a bad idea as an interim step to utilizing a trailing stop as db advocates. personally, i feel better locking in a profit rather quickly - thats just my personality and it fits me - plus as my size increases, the daily profit should too - what i mean is if you're trading 3,000 shares and take $.15 quickly on 1/3rd thats still $150 with 2,000 shares still running.... BTW, db, i have found your ADR comments very interesting and as applied to my trading and anticipate that over time they will be extremely helpful... if noting else, they give you an idea where the price could go throughout the day.
gotta run and take the kids swimming - the weather here in socal is like summer!
not me man. I see what would have happened if I cut em short, and what would have happened if I let em run, and I come up with an average and that's my target.
I don't know that it will be very helpful with stocks. But if you're a pattern trader, it makes sense to define your target as the pattern does. Whether one exits at the target or just tightens the stop in case price continues on is a choice one has to make. One of the major tasks here is to find a pattern big enough to make the trade worthwhile, and this is difficult to do with very small bar lengths.
This can get pretty complicated depending on the type of trader one is, the instrument traded, the bar length, etc, but it is nonetheless important to find some way of determining a target other than just manufacturing one out of thin air, then letting the plan do what it's supposed to do, rather than entering a trade as though one is spinning the wheel. If that means setting a limit order for the exit and walking away, perhaps that is what the trader will have to do in order to stop himself from futzing with it.
--Db