Quote from Softgiant:
this is a hard lesson to learn, everytime it gets to where I am thinking"should I sell"...I should. but sometimes I dont becuase I "dont want to miss out" if it runs. Then I kick myself. Still working on this psychological aspect of my trading.
Don't lie to yourself. You don't understand whether the market will continue or reverse. This is why you are unable to make the correct decision. The psychological aspect has nothing to do with it. If you knew what would happen but let your emotions interfere with your judgement, it would be a different story, but it sounds like you are simply guessing.
Quote from schizo:
One way I overcame this problem is by scaling out of the position. I would often sell or cover half and lower the stop for the other half to b/e. This way I can at least pocket half while letting the remainder to ride out the move.
What's hard is that when the damn price moves like 10-ticks in your favor and then stalls, should you sell or move your stop to breakeven? Or leave your initial stop alone? You know from your previous experience that it often retraces back down to your entry, usually just above the S/R, and then shoot right back up. So should you let the trade work itself out?
Of course, I know what I would do but, if you give some serious thought to this dilemma, it might not be so easy as it seems.
You are not overcoming any problem by doing this. What you are doing is selling profitable positions at a worse average price, and still getting screwed at full size when you take a loss. You are satisfying an emotional need to take some profits off the table.
What is this moving stops to breakeven nonsense? If you know price is coming back to your entry then you make the decision to hold or sell depending on what it will do after that. If you are nimble enough to sell and buy it back 10 cents lower, great. If not, hold through it. Where the market is going next has nothing to do with where you got in. Break even exists in your head and nowhere else. How many times have you been stopped at break even only for the market to continue in the direction you had traded?
The average prices of large groups of traders matter. Yours does not. It should not factor into your decision making process whatsoever. As for whether you should enter, hold, or exit - needs to be based on what you understand the market will do next. No substitute for knowledge.
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.
That is a very limited way to think. There are many traders who can "see into the future" and who are able to take the whole move. If you cannot yet do this, you damage your potential by refusing to aspire to such proficiency.
I agree with the rest of your comments however.
Quote from enochbenjamin:
Maybe I am just a blockhead but I can't seem to see how if when i entered the trade I was only willing to risk $100 why I would be willing to risk $500 as the trade develops.[/B]
Exactly!
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This really is a horrible thread to read through. The blind leading the blind. All this pain and fear, negative language, and the old textbook cliches. Even the question posed is negative - what is worse, one market error or another. Does it matter? They all come from the same place and all affect your bottom line.
Everyone here who tries to trade should have clearly defined criteria for entering and exiting trades. This should be based on an understanding of how the market works. With these tools, it should be simple to trade correctly. If you do not get the results you expect it is because your understanding is crap or you can't follow your rules. Either way, back to the drawing board and improve.
There is no "missing out" on a move if you don't understand how to get in on it. How can you miss a trade? If it is part of your setup and you saw it form in real time and didn't take it then you didn't "miss" it, you lost your balls. If you didnt' understand it, then you didn't miss it either. If you weren't giving the market your full attention at the time then you also didn't miss anything.
Equally there is no "missing out" when you let a profit come back to breakeven. It was never really a profit because you didn't call the market right and didn't understand enough to manage the trade correctly. Therefore you did not earn the profit because you didn't understand the condition.
Even expert traders will occaisionally get surprised by a counter move developing and give back quite a bit of unrealised profits. Of course there is no reason to beat yourself up for this - if you understood it would reverse, you would have been out at a better price. It is only "missing out" if you do not learn from your mistake.
Next topic for discussion... which is worse: thumb screws or the rack?
