What to do while profits roll in?

[Handle123]

What to do while profits roll in?

 

[skeltor]

Are we talking about scalping equities?

 

[murray t turtle]

We're playing a grownup version of the marshmallow test
(A) You take profits now, you get 1 unit profit
vs
(B) If you wait, you may get 3 units
BUT there's also the possibility of getting zero

HOWEVER with (A) if you take profits now, you might get 1 unit profit immediately, then you can re-enter the trade when it goes back to a Fib retracement, then on that second re-entry, you can sit and wait for another 3 units profit, so you have your cake and eat it too

I think it's difficult to wait sometimes because the payoffs with waiting vs. taking are uncertain. If it's so clear cut as 1 marshmallow right now vs 2 in 5 minutes, then of course it's much easier.

If you're the rare trader who always gets out around the right time / erring on the side of being too late to exit even, care to educate us on what you do while the profits roll in? or what your thought process is in terms of being able to hold on for the 3 unit profit while ignoring the possibility you might give all the gains back?

eg. if 1 unit profit is like $1000, seeing $1000 of gains melt away is a real bummer
but then if you constantly only take 1 unit profit out of a 3 unit profit potential trade, that's like leaving $2000 on the table every time as well

%%
I noticed you like round numbers/me to, pineT b.
[1aI would not want to get in the habit of giving $1,000 back unless that turned out to be super small %of profits; and even then i would aim @ not giving all that back.
[2] Good thing for us there are more than 2 good choices in trading.
[3 B] IF you are bound to those 2 choices+ really you can do better than 3 units long term[monthly charts] average/because the possibility of losing is possible. But not likely losing all your profit much.
But losing all that % should be very hard to do. Unless the market turns trends[major] or you are trading to large.
You are right/ in the sense if we were trading marsh mellows, easy to get 1,2/3/777.
[7.77]Feel free to scalp on a 5 minute chart if you want to. But i have to pay my power bill this week, or next+ buy some gas this week or next month. So really , when i sell late\good points about it being to late to '' exit even ''.Don't know why Stock Traders Almanac divided it up in months; but that's life. Good idea of yours taking smaller profits occasionally.

 

[danielc1]

thanks, that's a interesting perspective

when you're "willing to give up everything in between", do you set a specific price & not budge regardless of the price action in between?

sometimes i waver after following the intermittent price action too closely, where even though i have a original target price, i move the price target after being too caught up in the whipsaws[/QUOTE

I set a specific target before taking action with an exit strategy. I trail most of the time my stop and just start to adjust it, when a 5 to 1 winner is in sight. Everything in between is not a profit in my mind. When I start to mess with that, my win ratio has to go up. It is much harder to have a win ratio above 50%, with a 1 to 1 winner, than a win ratio of 20% and a 5 to 1 winner.
The holy grail is of course a combination of above 50% win ratio and a 3 to 1 or higher return.

 

[hilmy83]

i'll take the 1 marshmallow and bet 2 marshmallows on the next trade. Small profits compounded daily, that's how i roll

 

[pinetboltz]

%%
I noticed you like round numbers/me to, pineT b.

lol to paraphrase GG from the movie Wall Street 2, a fellow OCD always spots another OCD

 

[pinetboltz]

great to get diff inputs and perspectives on this

so i guess we kinda got to reframe the question to a top-down decision
from focusing on "what to do while profits roll in" at the single trade level
--> to "what's the optimum mix of achievable win/loss ratio, risk/reward ratio, frequency # of available trades, which market to best capitalize on" at the strategy level
as that would determine whether for us to (a) take profit and move onto the next opportunity, or (b) take the hardline approach, hold on a bit longer for potentially significantly larger profit, repeated lots of times

 

[VicBee]

I'm surprised no one has yet said "what does your plan say?"

 

[murray t turtle]

lol to paraphrase GG from the movie Wall Street 2, a fellow OCD always spots another OCD

%%
ROUND numbers got even more POPular in the past several years I have counted the pine timbers[ yellow pineT]n a log truck, may or may not be a round number.............................................................................................,
I dont think a pine load will bring $3k , but havent checked the price of pine lately??????

 

[spooz]

Not knowing what you are trading, or the time frame you are trading it in, my answer may be completely useless. Let's say you are short and the market is falling nicely. One way of getting out at a reasonable price is to switch your brain around for a second. Imagine that you are very bullish on this market and want to get long. So where are you going to do it? That point is your exit price. You may have to go out to a larger time frame to see those prices. It's a very effective way of getting out close to the bottom. Of course markets don't cooperate sometimes so you have to sit and watch it no matter how long it takes could be a few minutes could be a few hours and you have to monitor your position. The best way of doing that is to drop a time frame or two so you can see what's going on inside in your longer time frame bars.

This Chart is a 5 second ESM. See how the move is losing momentum. It's saying Cover on the next low.