Getting out of trades too early

Quote from Trader.Fighter:

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.
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Thats trend wisdom.
I like LOTs of weekly candlecharts;
but monthy candlechart are USUALLY much better for trends.

Try study of monthy candlecharts;
even the Market Makers Edge book by Joshua Lukeman is full of monthly charts:cool: %%%%%%%%%%%%%%%%%%%%%%%%%
 
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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If you're decently profitable then don't worry about it too much. I long ago decided that I'd rather be consistently too early with my exits rather than too late, and sacrifice potentially faster long-term capital accumulation for the tangible benefits of a smoother equity curve. These include reduced stress, increased consistency and robustness of my performance to changing market conditions, and shorter and shallower drawdowns in the event something goes wrong.

As your skill level improves you will naturally become more efficient with your trades, until eventually you reach the optimal (for you) tradeoff between R:R, winrate and PnL volatility.

That said, I would look more seriously at the issue if your exits were massively degrading your performance, say by a factor of 2 or more. In this case the lost edge is large enough that you could reasonably apply hard-and-fast rules initially, and over time get comfortable with the new ratios.
 
never think you leave money on table.

when you think that way. because you look back.

when you look forward, you will "yes, that is what I should do".

fact is meaningless. focus on fact, you are stuck in history.

No one can precisly target each trade.

if I make money, I am just happy. I know that is luck.

if I lost money because I did not take money, I am not happy. I know I am blind to the fact that I may lose.

if I lost money because I am willing to lose, intend to, I am happy. I know losing money is part of the game.

LUCK is something which you can not grab after it is gone!
You must grab it before it passes you.

pro-active trading is very critical! opportunities rushes toward you, but the only way is strike it and grab it, not look back after it passes.
 
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....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.
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You've answered your own dilemma, brother Half.
 
I scalp out, but my entries are improving, so my plan is to continue scalping out, and as long as my entries are consistently high quality, I'll either add funds or reach gain point where I will have enough account cushion for 2 contract and always scalp out on 1, then advance stop to be+1 on 2nd, and hold for either an obvious end to the reason to be in the trade, or try to swing that contract for a measured move or next resistance/support area, or prior pivot hi/low, or above average bar move on exhaustion. ...however if I'm under for a long time but I get back to break even, I can't break that psych barrier to just kill it @ be, that's fine, I can live with that issue.
 
scale out of your trades by blocks of shares. for example if you are long rig from 48.50 1000 shares, why not place limit orders of blocks of 200-300 shares maybe .25 over your entry? if you are looking to make .50-.60 a decent timeline

get the rebate, lock in some profits and allow the final shares to continue run and move stops up as you go.
 
I think there are some really good suggestions here. I have been personally struggling with this very same issue.

Here are my thoughts on the subject matter.

The first idea I got from a seminar by Linda Bradford Raschke. You should expect to feel regret when you sell because the price continued. Of course. No one can sell the bottom or the top.

The second idea is that there is a natural trade off between different exits. Larger targets means fewer wins (but larger wins). Smaller targets mean more wins, but smaller. Scaling out means you take a full loss, but only a partial win. Scaling in renders you subject to pyramiding losses or frustrating stop-outs. Choose your poison; there is no "right" or best answer. Best of all, if your entries are pretty good, with a decent risk ratio, you can be profitable with all of them.

So put the methodology question to the side.

The most important aspect of this is "What can you stick to every time?" Ahh, here is the real rub.

Once again, there is no easy or right answer. Let's say you go for small wins. Will you have the stamina to re-enter or reverse as your system dictates? Can you maintain a high winning percentage?

Okay, so hold on for the big winners. But day after day, the market gets 70% of the way to your target then reverses. How frustrating. Hard to maintain this discipline, but, it takes just a few wins to offset many losses, and commissions and whipsaws are reduced.

What can you consistently stick to? Go with that.

So, that is where I am at in my thinking. I have set my exit rules and targets, and I am trying the Mark Douglas challenge to see if I can stick to my rules for 5 trades. Yeah, I know he says twenty, but I need baby steps. If I can five disciplined trades in a row, then I will try again for six. In the past I have gotten to eight or nine, but my trading systems did not have a long term positive expectancy, so I had to start over. My record so far (over the past week) is 2. Which is better than one.

Good luck and safe trading.
 
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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What's been imprinted on your psyche is 1) the relief you feel when your early exit saves you from a loss 20% of the time, and 2) the relief you feel when you extract some money from the market and are now free from that "mental torture".

So your bad habits have been associated with temporary relief from pain, but you're stuck with the pain of small profits (or possibly losses) over time. Whenever a bad habit brings momentary relief, we tend to keep doing it. Smokers reach for another cigarette, drinkers for another drink, junk food junkies for another cookie, despite the net negative result of these series' of momentary "pleasure".

Addicts must learn to sit with the discomfort of the craving until it subsides (it eventually does), and for a lasting recovery they must rout out the defects of thought and behavior that led to the addiction and send their egos to the back seat.

You've been unable to sit with the discomfort of normal price action and never give yourself the chance to imprint that amazing ("this seems unreal") feeling of realizing your with-plan profit targets that 80% of the time the market offers to you.

When you're in a trade, breathe deeply and slowly and fully accept the cost of the trade and the discomfort, knowing that over a series of trades the outcome will be far better than if you micro-manage each trade according to what you habitually think and how you feel.

I think developing this mindset is the toughest barrier to consistently profitable trading.
 
Quote from roreilly:

I think there are some really good suggestions here. I have been personally struggling with this very same issue.

Here are my thoughts on the subject matter.

The first idea I got from a seminar by Linda Bradford Raschke. You should expect to feel regret when you sell because the price continued. Of course. No one can sell the bottom or the top.

The second idea is that there is a natural trade off between different exits. Larger targets means fewer wins (but larger wins). Smaller targets mean more wins, but smaller. Scaling out means you take a full loss, but only a partial win. Scaling in renders you subject to pyramiding losses or frustrating stop-outs. Choose your poison; there is no "right" or best answer. Best of all, if your entries are pretty good, with a decent risk ratio, you can be profitable with all of them.

So put the methodology question to the side.

The most important aspect of this is "What can you stick to every time?" Ahh, here is the real rub.

Once again, there is no easy or right answer. Let's say you go for small wins. Will you have the stamina to re-enter or reverse as your system dictates? Can you maintain a high winning percentage?

Okay, so hold on for the big winners. But day after day, the market gets 70% of the way to your target then reverses. How frustrating. Hard to maintain this discipline, but, it takes just a few wins to offset many losses, and commissions and whipsaws are reduced.

What can you consistently stick to? Go with that.

So, that is where I am at in my thinking. I have set my exit rules and targets, and I am trying the Mark Douglas challenge to see if I can stick to my rules for 5 trades. Yeah, I know he says twenty, but I need baby steps. If I can five disciplined trades in a row, then I will try again for six. In the past I have gotten to eight or nine, but my trading systems did not have a long term positive expectancy, so I had to start over. My record so far (over the past week) is 2. Which is better than one.

Good luck and safe trading.
More...


This post nails it. thanks.
One advantage of sitting on your hands and let the price run is, you take fewer trades so less risk/trade and less commissions/slippages etc. End of the day when you plot your trades on the chart it is much cleaner.
 
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