What's Worse: Missing the Move Entirely or Giving All Your Profit Back?

If it was part of your plan you have nothing to regret..

Its hard to catch a 10 or 20 point move without enduring a deep retrace now a days, that may reverse and stop you out. On what ever timeframe you trade you will confront this senario. I have given it all back and stopped out many a time. You have to do this to catch the "fat tails" that will make your portfolio's year. Like a short I was in today was up 8 points and then later was as close as 2 points away from stopping me out. I'm still in it and its now up 10 points or so. If it has follow through in the morning and goes another 5 or 10 was it worth the heat? Yes. Would I have stopped out had it hit me, Yes.

You gotta know when to hold-em, Know when to fold-em, know when to walk away, know when to run, YOU NEVER COUNT YOUR MONEY WHEN YOUR SITTIN AT THE TABLE, there will be time enough for counting, when the dealings done.

Don't drive yourself to crazy over this aspect of trading.. Good luck.


Quote from schizo:

From newbies to pros, we've all been there. Whether you missed a pop or you rode the pop only to give it all back, the outcome is the same. This is perhaps the oldest conundrum that have plagued traders world over for eons.

Fear and greed? Hardly. Stupidity is more like it.
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schizo:

To believe you can actually capture the entire move is the unfortunate delusion that most of us suffer from (me included).

But the fact is that the ONLY way you can capture the entire move is if you can see the future. We cannot see into the future, thus to expect you can capture an entire move is simple delusion.

What you can capture when a trade goes your way, however, is the profits as defined by your trading strategy.

You should be able to quantify how successful that strategy is (ie. if you follow this, will it produce good results 66% of the time? 30% of the time? 90% of the time?)

If you consistently follow a particular strategy, THAT will tell you when to get out of the trade, and then you will be okay with whatever results that brings you. That's because you can always turn around and say "okay I got a loss, but I know that this loss will only occur every 23% of the time", or "I know I will get profits 72% of the time when I follow this".

If you make your trading more mechanical, you can shed some of the emotional regret you get by staying in a trade too short or too long.

Remember, the markets will be there tomorrow, and it will be there 50 years from now. It's going no where. The same opportunities will present themselves to you probably in the near future, so don't worry about a single miss.
 
Quote from schizo:

LOL, you can grease me up really good. On that note, if you trade CL, I welcome you to stop by the CL Redux thread and give us goose bumps with your magic potion (errr, I mean your MAs). :cool:
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Quote from risky63:

I CAN'T WAIT.........
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Ooooo, Challenge at the Redux!

Gotta get my beauty sleep and my "A" game on...
 
Well stated and duly noted. Thank you.

I'm trying to quantify my system as much as possible but regretfully there are certain elements that remain outside the purview of automation, let alone backtest. For example, I mainly use S/R and trendlines. Now S/R, being static, is easy to backtest. But just how the hell can you backtest trendlines? First, not all trendlines are created equal and, second, I don't trade every trendline.


Quote from jedwards:

schizo:

To believe you can actually capture the entire move is the unfortunate delusion that most of us suffer from (me included).

But the fact is that the ONLY way you can capture the entire move is if you can see the future. We cannot see into the future, thus to expect you can capture an entire move is simple delusion.

What you can capture when a trade goes your way, however, is the profits as defined by your trading strategy.

You should be able to quantify how successful that strategy is (ie. if you follow this, will it produce good results 66% of the time? 30% of the time? 90% of the time?)

If you consistently follow a particular strategy, THAT will tell you when to get out of the trade, and then you will be okay with whatever results that brings you. That's because you can always turn around and say "okay I got a loss, but I know that this loss will only occur every 23% of the time", or "I know I will get profits 72% of the time when I follow this".

If you make your trading more mechanical, you can shed some of the emotional regret you get by staying in a trade too short or too long.

Remember, the markets will be there tomorrow, and it will be there 50 years from now. It's going no where. The same opportunities will present themselves to you probably in the near future, so don't worry about a single miss.
More...
 
Quote from schizo:

Well stated and duly noted. Thank you.

I'm trying to quantify my system as much as possible but regretfully there are certain elements that remain outside the purview of automation, let alone backtest. For example, I mainly use S/R and trendlines. Now S/R, being static, is easy to backtest. But just how the hell can you backtest trendlines? First, not all trendlines are created equal and, second, I don't trade every trendline.
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I can totally understand. I'm in exactly the same boat, in that I don't have a precise understanding of the mechanics of the system I use. I have a system that I'm working on quantifying, but it's very hard and I've gone discretionary this month which makes it even harder.

On a similar note, I was watching a free video from John Carter on tradethemarkets.com, and he had a live trade going on GS options on OEX day last week. I think the video is still on his site.

It's a really great video but more so for the intangibles of watching an elite trader like John Carter. His P/L was +$150k at one point, and while waiting for GS to break new lows, his profits literally disappeared, and he may have taken a small loss. He was up over $250k for the day, even with the small loss, however, I was thinking a lot about that trade because stuff like that happens to me all the time.

Of course, the P/L that I am trading are in the $100-$1000 range, not $150k range. But when you listen to him, he's not freaking out over losing out on over $150k.

Obviously, he's super rich, but it seems like he was willing to risk the $150k profits for what I could only guess was over $500k in potential profits if it broke new lows. I'm guessing that he knew roughly what the probability of the winning trade was, and that was a reason for the risk he was taking, so that's why he was able to walk away from the trade without wanting to blow his brains out over the lost profits, which is what I would do if I lost a few hundred in profits, let along hundreds of thousands.

So in a similar vein and kind of repeating what I said earlier, if there is a reason for letting the trade go a little longer, and then watching your profits evaporate, as long as you have a good reason for it, and you can say it was worth the risk, then maybe that will help get rid of any regrets.
 
You can only trade YOUR setup and not get too far ahead of yourself. When you start counting profits before they occur, thats a sign you have gotten ahead of yourself and to let some go.
 
Quote from ChaosNSX:

If it was part of your plan you have nothing to regret..

Its hard to catch a 10 or 20 point move without enduring a deep retrace now a days, that may reverse and stop you out. On what ever timeframe you trade you will confront this senario. I have given it all back and stopped out many a time. You have to do this to catch the "fat tails" that will make your portfolio's year. Like a short I was in today was up 8 points and then later was as close as 2 points away from stopping me out. I'm still in it and its now up 10 points or so. If it has follow through in the morning and goes another 5 or 10 was it worth the heat? Yes. Would I have stopped out had it hit me, Yes.

You gotta know when to hold-em, Know when to fold-em, know when to walk away, know when to run, YOU NEVER COUNT YOUR MONEY WHEN YOUR SITTIN AT THE TABLE, there will be time enough for counting, when the dealings done.

Don't drive yourself to crazy over this aspect of trading.. Good luck.
More...

Well said moderator.
 
After years of trading, I have convinced myself it is OK to miss a move. Trying to catch a move is very hard without buying a top or selling a bottom, and many times you end up chasing it with bad entries. How do you know when the move is coming?? If the market moves, then at least you know where they want to go and you can work on entering on a retracement of some type.

So with that being said, it's worse giving all your profit back.
 
Without a doubt, giving back all your profits is way worse.

You are always going to miss entire market moves. There are too many market moves to take part in. That's just part of the game.
Giving back ALL profits is a mortal sin
 
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