Taking profit way too early!?

[SimpleMeLike]

I'm quite patient on entering my trade, but when it comes to profit taking I'm way to quick to exit. I watch the screen and within minutes see a few points in the micro emini /es, I take it. I've noticed that if I would have held longer, I'd be more profitable.

Should I force myself to set a bracket order when entering the trade, including my stop and profit target and just forget about it. This way I'm sticking to my rules. I guess I may know the answer but hard for me to implement?!

Any fellow traders have this issue and how they overcame/handled it?

Hello sjain100,

Great question

I am not a consistent profitable trader for more than 1 year, so I can not help you.

Thank you,

 

[mason macgregorson]

I'm quite patient on entering my trade, but when it comes to profit taking I'm way to quick to exit. I watch the screen and within minutes see a few points in the micro emini /es, I take it. I've noticed that if I would have held longer, I'd be more profitable.

Many fellow traders have this issue and and it is 1 of 10 psychological faults we have (https://listverse.com/2010/01/07/top-10-common-faults-in-human-thought/), #3 is hyperbolic discounting = the tendency for people to prefer a smaller, immediate payoff over a larger, delayed payoff. It is all about delay.
Your issues are well documented.

 

[stepan7]

I'm quite patient on entering my trade, but when it comes to profit taking I'm way to quick to exit. I watch the screen and within minutes see a few points in the micro emini /es, I take it. I've noticed that if I would have held longer, I'd be more profitable.

Should I force myself to set a bracket order when entering the trade, including my stop and profit target and just forget about it. This way I'm sticking to my rules. I guess I may know the answer but hard for me to implement?!

Any fellow traders have this issue and how they overcame/handled it?

“And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early, bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”

Excerpt From
Reminiscences Of A Stock Operator
Edwin Lefevre

 

[Gambitman]

“And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early, bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”

Excerpt From
Reminiscences Of A Stock Operator
Edwin Lefevre

Came here to post this. Hard to sit tight and be right.

 

[SimpleMeLike]

“And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight! It is no trick at all to be right on the market. You always find lots of early, bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine—that is, they made no real money out of it. Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.”

Excerpt From
Reminiscences Of A Stock Operator
Edwin Lefevre

Hello stepan7,

I disagree with this statement from Reminiscences Of A Stock Operator book.

If all a trader had to do was to enter the trade and sit tight, we all be rich right?

 

[schizo]

Should I force myself to set a bracket order when entering the trade, including my stop and profit target and just forget about it. This way I'm sticking to my rules. I guess I may know the answer but hard for me to implement?!

A good setup/rule would involve both entry and exit. You should only get out when the exit condition has been met, eg. either when the profit target is hit or you get stopped out.

Taking a partial profit with a quarter or half & letting the rest run works for me. This way you have a scratch, a small profit, or a free ride.

Personally, I think this is a terrible strategy. Your goal should always be to strive to improve your entry. Taking partial profit already tells me that you were never comfortable with your entry.

 

[sjain100]

I once read somewhere: "if you focus on the entry you are bound to failure, plan your exit and execute it regardless anything else, then you might be doing something right". Much better if you can automate your exits so you stop worrying about it. +1 to brackets orders imho

Yes, going to make it a rule to use a bracket enter before entry. thx

 

[sjain100]

A good setup/rule would involve both entry and exit. You should only get out when the exit condition has been met, eg. either when the profit target is hit or you get stopped out.


Personally, I think this is a terrible strategy. Your goal should always be to strive to improve your entry. Taking partial profit already tells me that you were never comfortable with your entry.

That's what I think too, improving entry (waiting patiently for a good setup) is very important as well and probability of stop being hit may be less.

 

[sjain100]

Plenty of good comments on here.

Taking a partial profit with a quarter or half & letting the rest run works for me. This way you have a scratch, a small profit, or a free ride.

Once I have a winner running I am checking the trade periodically, like every few hours, or not watching it at all. My best trades I almost forget about them until I hear "order filled'.

A sure way to F up a perfectly good trade is staring at the PnL and shorter time frame chart.
Once I have a winner I switch up to higher time frame to manage it.

Many fellow traders have this issue and and it is 1 of 10 psychological faults we have (https://listverse.com/2010/01/07/top-10-common-faults-in-human-thought/), #3 is hyperbolic discounting = the tendency for people to prefer a smaller, immediate payoff over a larger, delayed payoff. It is all about delay.
Your issues are well documented.

Thx for the link

 

[sjain100]

Many fellow traders have this issue and and it is 1 of 10 psychological faults we have (https://listverse.com/2010/01/07/top-10-common-faults-in-human-thought/), #3 is hyperbolic discounting = the tendency for people to prefer a smaller, immediate payoff over a larger, delayed payoff. It is all about delay.
Your issues are well documented.

Must delay the payoff and see how that works out!