trailing stops/profit taking

S

Sarasota

In the last few months, my trading has really turned the corner, especially in the last two months. I am consistently making over 10 points per day trading the ES.

I would like to get some feedback from the group as to when to take profits. My biggest problem/mistake is letting a 7 point winner turn into a 4 point winner. Or like this morning, taking profits too early. This morning I bought at 927.75 at around 9:45 EST, and got out about 20 minutes later with a 5 point gain, only to see the market run up another 12 points or so in the early morning rally.

What do you guys use for trailing stops?

Thanks in advance.
 
if I knew the answer to that, I would know everything. It has always been my missing piece in the puzzle. I think it's all in my head. If I buy at the bottom, the market goes up 3.5 pts and I sell and then it turns and moves back down, I have made a great trade for a 3 pt profit.

If I buy in the middle, take out three points and it keeps moving up, then I have made a bad trade for a 3 pt profit.

I think we take it personally when the market we were in moves on without us. Sort of like seeing an old girlfriend with another guy.
 
This is my all time favorite topic, so forgive me if I go on and on.

Rule of thumb is 1 risk to 3 reward. So If we put in a 2 pt stop, we don't change it come hell or highwater till we either get stopped out for 2 or get our 6 pt profit.

But that is too simple. So then we try to trail at 2 and stay with it till we get stopped at whatever or hit six. But that is not really 1 to 3 anymore is it? I have often wondered what the effect of trailing the stop is.

So then we again try to compensate by just trailing with no profit objective. You know the routine.

And then there is, "If I'm so smart and figured out how to get in this winning trade, why shouldn't I just use my same smarts and get out right now cause it looks like the situation is deteriorating rapidly."
 
What is your current trading plan? Setup, entry, exit? WHy in the world would you want to tweak your plan if you are making 10 points a day consistently??


--MIKE
 
We start out with a plan and rules, but when we have a profit, suddenly we throw the plan and the rules out the window. We here this nagging rule inside our heads saying, "Never let a profit turn into a loss."

Now I ask you, how does the law of averages know that it can quit working for us because now we have a profit? Will it somehow then at a later time be called back into service when we are showing a loss?

You can't expect the law to protect you when you need it but disregard it anytime you are showing a profit.
 
But me personally, if I think I can get 1 pt I'll usually put it on with a 2 pt stop. Not a very sound starting strategy. If I do get my 1 pt, then I have to go through the whole agonizing process of assessing the situation all over again. And I just keep doing it over and over again asking myself, "Do you see anything which would indicate that it is time to close this trade?" If the answer is no, I just stick with it.

If the answer is yes, you don't have to tell me twice.

My brain tells me I would like a more reasoned systematic approach. But my heart tells me I like it this way.
 
Originally posted by Trend Fader
What is your current trading plan? Setup, entry, exit? WHy in the world would you want to tweak your plan if you are making 10 points a day consistently??


--MIKE
More...

Hi Mike. I would prefer not to reveal my trading method, and I am not really trying to tweak it. I guess I am looking to make 15 points per day instead of 10!
 
Originally posted by Sarasota
In the last few months, my trading has really turned the corner, especially in the last two months. I am consistently making over 10 points per day trading the ES.

I would like to get some feedback from the group as to when to take profits. My biggest problem/mistake is letting a 7 point winner turn into a 4 point winner. Or like this morning, taking profits too early. This morning I bought at 927.75 at around 9:45 EST, and got out about 20 minutes later with a 5 point gain, only to see the market run up another 12 points or so in the early morning rally.

What do you guys use for trailing stops?

Thanks in advance.
More...

wow!

if you are able to maintain such a performance over a long time - you are of course one of the absolute top traders.

somebody posted elsewhere here that many professionals go for about 10 pts a week - so your 50 pts / week really have my deepest respect!!
 
Have you done any analysis of your trades? I suspect that if you look back you may find that half the time you did the right thing by getting out when you did. If this is true you probably would not have made any more over the long run. Worrying about money left on the table is demoralizing. Its a bad habit.
 
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