Getting out of trades too early

H

halfwaythere

Looking at past trades I realize I leave a lot left on the table getting out of trades too early before my target. In the heat of the trade I fail to realize and understand that price will go up and down before reaching my target. I see the price get within a point of my target, shoot up 50% towards my entry, watch my profits diminish - it's mental torture and I exit the position rationalizing to myself "just in case" or "a little profit is better than nothing", only for the price to eventually come down to my target or further 80% of the time. It's that 20% of the time I exit before my target where I'm thankful that I did exit before my target because the price would have reversed and taken me out. It's a head game I play with myself but in reality it's a very bad habit and I should stick to my target or nothing at all, or I will continue to rationalize getting out early to myself. Maybe deep down I don't trust my edge (although the numbers don't lie it works) Maybe I'm just protecting my ego?

cheers mates
 
Develop logical rules for exiting for a profit based on market analysis or statistics (MFE). Follow them. Much easier to follow rules than guess which is the ideal point to exit every time.
 
I think you should always know in the back of your head that some will reach your target and some wont. Maybe you should try adding a partial out system in your strategy. That way you take profits half way and full way, or just half way.
 
Quote from halfwaythere:

Looking at past trades I realize I leave a lot left on the table getting out of trades too early before my target. In the heat of the trade I fail to realize and understand that price will go up and down before reaching my target. I see the price get within a point of my target, shoot up 50% towards my entry, watch my profits diminish - it's mental torture and I exit the position rationalizing to myself "just in case" or "a little profit is better than nothing", only for the price to eventually come down to my target or further 80% of the time. It's that 20% of the time I exit before my target where I'm thankful that I did exit before my target because the price would have reversed and taken me out. It's a head game I play with myself but in reality it's a very bad habit and I should stick to my target or nothing at all, or I will continue to rationalize getting out early to myself. Maybe deep down I don't trust my edge (although the numbers don't lie it works) Maybe I'm just protecting my ego?

cheers mates
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Instead of going through all this, why not just develop criteria for exit and re-entry?
 
Quote from halfwaythere:
----past trades....leave a lot on the table....getting out of trades too early before my target....the heat of the trade....see the price get within....watch my profits diminish....mental torture.....exit the position.....rationalizing....little profit.....price eventually gets down to my target....80% of the time....20% of the time I exit before my target where I'm thankful that I did....head game....in reality it's a very bad habit....stick to my target or nothing at all....continue to rationalize....don't trust my edge....numbers don't lie....protecting my ego?
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1) Everybody goes through "that". Reality is different than expectation. :cool:
2) Objectivity and logic are "easy" when you're out of the market. They disappear quickly when you have an open position. :)
3) Targets are "arbitrary". They can distract or blind you to what the market is doing. :eek:
4) You have to be able to fight through the randomness and agony of "money left on the table" and loss avoidance on trades when you exit prematurely. :(
5) The way you want to trade and actually trade are different. You seem more "protective" of your money instead of being greedy for the larger gains. :cool:
6) How do you feel on trades that hit your target but the market continues on without you onboard, once again, where you appear to "leave money on the table"? :confused:
 
Quote from nazzdack:

1) Everybody goes through "that". Reality is different than expectation. :cool:
2) Objectivity and logic are "easy" when you're out of the market. They disappear quickly when you have an open position. :)
3) Targets are "arbitrary". They can distract or blind you to what the market is doing. :eek:
4) You have to be able to fight through the randomness and agony of "money left on the table" and loss avoidance on trades when you exit prematurely. :(
5) The way you want to trade and actually trade are different. You seem more "protective" of your money instead of being greedy for the larger gains. :cool:
6) How do you feel on trades that hit your target but the market continues on without you onboard, once again, where you appear to "leave money on the table"? :confused:
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6. I feel fantastic not a single regret, because I traded well and executed my plan.
 
Best method is to have a solid trail stop, this will allow you to let winners run to the best of your abilities.

The downside is that you will NEVER exit at the top or bottom but who cares right? That's just ego :)

If you never let your trades become a home run, they never will.
 
Quote from halfwaythere:

Looking at past trades I realize I leave a lot left on the table getting out of trades too early before my target. In the heat of the trade I fail to realize and understand that price will go up and down before reaching my target. I see the price get within a point of my target, shoot up 50% towards my entry, watch my profits diminish - it's mental torture and I exit the position rationalizing to myself "just in case" or "a little profit is better than nothing", only for the price to eventually come down to my target or further 80% of the time. It's that 20% of the time I exit before my target where I'm thankful that I did exit before my target because the price would have reversed and taken me out. It's a head game I play with myself but in reality it's a very bad habit and I should stick to my target or nothing at all, or I will continue to rationalize getting out early to myself. Maybe deep down I don't trust my edge (although the numbers don't lie it works) Maybe I'm just protecting my ego?

cheers mates
More...

What is your RR?

What you saw is the reality of a probably negative sum game. You are already ahead of maybe 80% of the people, because you have seen it. Being ahead does not necessarily imply a guarantee of profits. The market has a 75% chance to get a randomly select person wrong.

You may want to think about parallel systems made up of systems that are not serial. This is not sufficient either. The probability of loss is always non zero.
 
Quote from halfwaythere:

Looking at past trades I realize I leave a lot left on the table getting out of trades too early before my target. In the heat of the trade I fail to realize and understand that price will go up and down before reaching my target. I see the price get within a point of my target, shoot up 50% towards my entry, watch my profits diminish - it's mental torture and I exit the position rationalizing to myself "just in case" or "a little profit is better than nothing", only for the price to eventually come down to my target or further 80% of the time. It's that 20% of the time I exit before my target where I'm thankful that I did exit before my target because the price would have reversed and taken me out. It's a head game I play with myself but in reality it's a very bad habit and I should stick to my target or nothing at all, or I will continue to rationalize getting out early to myself. Maybe deep down I don't trust my edge (although the numbers don't lie it works) Maybe I'm just protecting my ego?

cheers mates
More...

Considering you have verified statistical information that tells you the price action reaches your designated profit target 80% of the time while your early exits was smart only 20% of the time...

It may be worth further investigation about the differences in the price action involving the 80% versus the 20% because there may be something hidden there that you can use to your advantage.

Think about the potential improvement in your profit curve if you can flip those percentages so that 80% you were correct in your early exits that allows you to protect your gained profits and that your early exits were wrong 20% of the time.

This is a key area of my own trading I've been improving.

Seriously, earily worth a few weekends of research for you into your trading habits and trade management rules. Could be a gold mine there for you.
 
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