How to change mindset to let profits run?

Quote from eagle:

It's all about the relation between a trade size and your account size as a whole.

If you're too nervous with 16 cars it does indicate that your current psychology is not yet to support this trade size comparing to your account size. At the moment you have built up your account bigger enough then the 16 cars will become as 1 or 2 cars and then the 64 or 128 cars will become a very stressful size and so on.
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Eagle hit the nail on the head. He is exactly right.

I will further explain from another perspective, albeit making a few assumptions along the way.

How many times have we been able to hold a contract for 30 points after being profitable right from the point of entry? Close to never most likely. You find that you get out after being profitable for a few points because that is your expectation. Simply to make a profit.

On the other hand, how many times have we been able to hold a contract for 30 points after being down 30 points in order to get to break even? This has been done probably more times than we would like . The difference is in the mindset to breakeven of course. Ultimately, you instill in yourself that you are looking for 30 points. Simply making a few points is inconsequential you come to realize. And thus, are able to hold for those entire 30 points should it materialize.

So what do you do? It is difficult, but simple. Your mindset should be to make 30 points on each and every trade. That is what you should be aiming for psychologically. Because most traders have experienced this before, it is something that most traders can do, but something that few actually do.

Stop loss, money management, setups - those are other aspects which can also be used to address this issue. But your question was one of mindset, so I tried to answer within those terms.

Hope this helps...
 
<i>"I wonder why is that? Why would they limit a client to bet using this system. Wouldn't allowing him to keep on doubling flash all his money???"</i>

Saxon, I wasn't disparaging you in any way! What I said was not at all personal... it was merely emotional fact. You have elected to trade from a base of fading market direction with need to catch turns at applicable spots before ruin hits.

A casino limits any client because any casino has a finite sum of money. It would be possible for collusion amongst ultra-rich players to break a casino by odds of probability otherwise. That is not a factor in some financial markets... those "houses" are far bigger than anyone can break via pure martingale. Still, there are position limits in place per smaller markets for that reason.

With all due respect, your 16 cars or even 160 cars cannot overwhelm the S&P on pure martingale alone.

*

Ask yourself this simple question. Why does any fear at all exist when holding a 16-car position? Either one of two things:

#1: You are over-leveraged and cannot take a small loss per contract that adds into big loss overall relative to account

#2: You are taking far bigger $$$ losses risked at 16-car (max) size than you are expecting same or greater gains from other winning positions of smaller size. You are assuming large risk on every loss relative to smaller gains on every win.

In my trading today, results were +15pts ES, -2pts ES, 0pt ES, -2pts ES, -1pt ES, +11pts ES and done at 10:46am EST. All of those trades went with the prevailing direction at that time(s) and all of them had -2pt initial stops with expectation of 3x to 5x gain potential. There is no fear of ruin involved when trading WITH price action, because there is no constant fear = concern = panic about taking on several times' risk per usual reward.

That's the emotional difference between directional trading versus fade trading. Directional trading = enduring small losses while seeking big(ger) relative gains. Fade trading = settling for small gains while constantly fearing & dreading large losses relative to average gains.

Hope that explanation helps :)
 
<i>"however, if the market were to go down another 60 points, one would continue doubling at 20 point intervals which would bring the position of 32 contracts long at -120 points which would be the equivelent of a 1100 to 1200 drop. Now in order to be able to hold over night and not get a margin call one would have to have around 250K in the account. So I say with 500K one could pull it off. My problem is I do not have 500K"</i>

You just described precisely why so many retail traders have busted out in the past few weeks. Total disbelief that the market can go x-points lower, so they keep buying into drops that set new all-time records by the close.

And wiped out umpteen retail accounts buying into bottomless charts in that process.
 
Quote from austinp:

<i>"however, if the market were to go down another 60 points, one would continue doubling at 20 point intervals which would bring the position of 32 contracts long at -120 points which would be the equivelent of a 1100 to 1200 drop. Now in order to be able to hold over night and not get a margin call one would have to have around 250K in the account. So I say with 500K one could pull it off. My problem is I do not have 500K"</i>

You just described precisely why so many retail traders have busted out in the past few weeks. Total disbelief that the market can go x-points lower, so they keep buying into drops that set new all-time records by the close.

And wiped out umpteen retail accounts buying into bottomless charts in that process.
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Austin I appreciate your input and I am familiar with your way of trading and would be the last person to state that it does not work. It does especially in markets like we have had lately. You are a good teacher and I do see your logic. Thanx for taking the time to explain your position. :D
 
probably isnt what your looking for but i use a sort of mechanical exit strategy after profitability


sort of like the exit position 1/2 at certain gain then let ride move to break even sort of deal cept i let my indicators push my exit points of course with a stop

so where as you hold 4 lots in the FX

my intial stop would be something like 96.50 on 5 min chart
i draw a line close 1/2 of my position @ 96.50 then let my rising ema cross my line then exit @ the higher price @ cross then draw trend line across lets say at 96.68 exit 1 more lot then let the last lot run its course

with just a break even then i take when i see change in momentum and direction
 
Quote from austinp:

<i>"I wonder why is that? Why would they limit a client to bet using this system. Wouldn't allowing him to keep on doubling flash all his money???"</i>

Saxon, I wasn't disparaging you in any way! What I said was not at all personal... it was merely emotional fact. You have elected to trade from a base of fading market direction with need to catch turns at applicable spots before ruin hits.

A casino limits any client because any casino has a finite sum of money. It would be possible for collusion amongst ultra-rich players to break a casino by odds of probability otherwise. That is not a factor in some financial markets... those "houses" are far bigger than anyone can break via pure martingale. Still, there are position limits in place per smaller markets for that reason.

With all due respect, your 16 cars or even 160 cars cannot overwhelm the S&P on pure martingale alone.

*

Ask yourself this simple question. Why does any fear at all exist when holding a 16-car position? Either one of two things:

#1: You are over-leveraged and cannot take a small loss per contract that adds into big loss overall relative to account

#2: You are taking far bigger $$$ losses risked at 16-car (max) size than you are expecting same or greater gains from other winning positions of smaller size. You are assuming large risk on every loss relative to smaller gains on every win.

In my trading today, results were +15pts ES, -2pts ES, 0pt ES, -2pts ES, -1pt ES, +11pts ES and done at 10:46am EST. All of those trades went with the prevailing direction at that time(s) and all of them had -2pt initial stops with expectation of 3x to 5x gain potential. There is no fear of ruin involved when trading WITH price action, because there is no constant fear = concern = panic about taking on several times' risk per usual reward.

That's the emotional difference between directional trading versus fade trading. Directional trading = enduring small losses while seeking big(ger) relative gains. Fade trading = settling for small gains while constantly fearing & dreading large losses relative to average gains.

Hope that explanation helps :)
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Since you posted yours, let me present my daily catch.
 

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<i>"Since you posted yours, let me present my daily catch."</i>

That of course is excellent... and nowhere did you fight the market today. There aren't any 16-contract positions there where you dug deep craters and hoped to backfill.

Today was a fantasy session for reversal or directional traders alike. It was easily possible to book +50pts (handles) ES from 3pm est into the close alone, if adept at measuring price direction.

I never said that the fade-trade approach doesn't work. For how long and to what degree is debatable. What is for sure would be the fact of harboring fear on every trade entry... never know if that's the one that will run straight against too far & wide. That in itself is what keeps a reversal = fade trader on the edge.

Congrats on an excellent day in the market :)
 
Quote from Eazy E:

Hi all,

I'm seeking some advice/opinions on how to best change my mindset into letting my profits run and limiting my losses?

I've been OK at eeking out small profits in this volatile market but have been consistently leaving much larger profits on the table.

Any thoughts and suggestions are appreciated!

Eazy
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The wash drill - focus your mind on breaking even on every trade especially on the "winners." Give up on trying to wash a "winning" trade and just exit if you haven't washed it by end of day. Entries that don't go in your favor right away are washed immediately. There are a lot more details that go into the drill. Enough has been discussed here to get the important details if you search.

Most people cannot even consider doing the drill. Usually people get into trading with a lot of preconceived ideas already in mind about how money is extracted. Analyzing and being "right" is the approach most often used. If you're too smart, you can't do the drill. A person who starts trading by himself with his own money likely cannot do the drill. If you can find someone who will put you in a no risk situation by backing your account and who will force you to go against your tendencies, that would be the best way to do it.

All the best.
 
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