Riding your winners and number of positions

L

LelandC

I am trying to come up with some way to stay with my winning positions longer. I do a real good job of cutting my losers quickly but have been having trouble staying with my winners. I daytrade and am flat at the end of the day. I am not really a scalper as I tend to look for .50 (usually 1.00) profit per trade.

When I look back at my "good trades" I would say 75% of the time (probably more) I would have been better off just holding the winner all day and selling near the close (I initiate most of my trades in the morning). Just wondering if anyone else has thought about this "time function" of trading? Once you have a winning trade what does probability say about holding that trade until the close? FWIW buying power is really not an issue with me.

Another thing I need to do a better job of is putting on multiple positions. When I get in a position I tend to focus solely on it and neglect other pertinent set-ups from my list. This really bugs me as I tend to miss a lot of great plays!!

Anyone care to discuss this?

Leland
 
LelandC,

Exiting a trade on a specific time has never worked for me - I get too impatient if I have a profit and the market looks wobbly - which it often does during mid-day.

The best way I know to achieve what you are asking is to both set a limit order to catch a profit target (predefined based of how that particular stock trades) AND also set a trailing stop that I manually change during the day - and connect those two with IB's OCA feature. If your broker does not support an OCA capability, you'd have to do the whole thing manually.

The trick here is to identify a reasonable/satisfactory profit target, by knowing the stock and learning to anicipate how far it moves during the day.

Yannis1
 
There is no exit time, or exit dollar amount. You get in when the market is screaming at you "buy me now" or "sell me now'...and get out when things stop or start to reverse. Remember, you can make 20 cents 5 times or pray for 1 dollar one time.

We try very hard to not think about the profit or loss, just good entries and exits.

(To all: Don't bother saying something like "sure, you want more commissions" or that I am trying to encourage more trading...this is simply how it is done)..
:-)
 
LelandC,

There is a lot to be said for holding a trade all day if possible. The problem is that stocks tend to pull back and you will have a lot of profits going to a loss, and frequently a significant loss. I think this approach is maybe better suited for the futures, where one seller is not going to produce a $.50 reversal. I have gradually come around to the idea that daytrading stocks is a game of taking quick small profits, then reentering on the inevitable pullbacks.
 
lelandC,

I have found it very difficult not to get emotionally involved in my positions. I have begun minimizing my account manager, so that I cannot see how much money I've made or lost. I just take the signals and try not to focus on the money.

Still, I've left more money on the table than I care to think about, because I "saw" something happening and felt I needed to take my profits/losses.
 
When I say hold onto the position all day I am talking about a position that is in the money. I try not to let winning trades turn into losers. Just trying to maximize my winners...

Very good suggestions so far.

Leland
 
LelandC

What is the average size of your loss? If you only want to lose 1 unit on a trade then I dont think it is reasonable to expect to make more than 2 or 3 units. You can't, imo, have both small losses and big winners, on average.
 
Try using 30-minute bars as your exit (H/L). Keeps you in for most shakeouts, minimizes churning, eliminates irrational emotions, allows tracking of multiple positions, and is profitable (for me at least) in the long run. Early morning and end of day try 15-minute bars. Objective is better than subjective if your subjective isn't working. :)
 
LelandC,

Well, the problem is they tend not to stay in the money. If you have a $1.00 profit on a $30 stock and the market is strong, I say stay with it if possible. If it's a $.20 profit, then you are highly likely to get whipsawed out on a move back to break even. To me, this is the number one issue of daytrading--how do you decide what to do with a $.15-.25 profit when the stock stalls?
 
easyrider,

I would say an average loss for me is around .25 or less.

ddefina,

I will take a look at your 30 minute bar suggestion. I currently use 10 minute bars for entries...

Good stuff...
 
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