When to Stop. When to Push.

M

macal425

Yesterday Hitman dug himself out of a $2000 loss back to just a $1000 loss. It was a good fightback, but what if he had dug himself into a deeper hole. At what point do you say to yourself "I just don't have it today".
There seems to be a fine line between having the confidence to continue when nothing is going your way and being too blind to see that you are blowing a big hole into your account.
It's easy to see in retrospect, the difference between the two, but extremely difficult to see when in the midst of it.
What kind of rules do other traders use to drag themselves out of the market (sometimes screaming and kicking)when in the middle of what could possibly end up being a confidence shattering blowout day.
 
I know what I can expect to make in a day and I always try to limit my losses to about half of that. The better I've gotten at sticking to it, the better my bottom line has become. Its hard sometimes because it puts me out first thing in the morning but the pressure to make it back distorts your judgement. If you reach that figure you need to walk away because if you sit there and watch, the temptation is too great.:)
 
If you reach that figure you need to walk away because if you sit there and watch, the temptation is too great.

Absolutely. I have daily, weekly, and monthly worst case dollar-loss scenarios. If any are hit I close down my trading software, turn off CNBC, and do not even think about trading. When I'm having a bad day/week/month it puts me in a lousy psychological place, and that's not the frame of mind I want to be in when I'm trading. I always take the long view so, for instance, if I'm having a bad day I don't need to make it up or get even that day.
 
I had mentioned earlier I HAVE TO DIG MYSELF OUT OF THIS HOLE attitude is extremely dangerous.

Take high probability setups when they come and keep your risk in line. Are you trading to be right or make money. Whenever I up my risk more than I normally do I usually will take a nice hit that can take awhile to recover from. Whenever I am in a drawdown my stress is increased.

Do you want to be making money decisions while under severe pressure?

I'd rather walk away with a small loss knowing I can make that loss up in a day or 2. Than a huge loss that can take months to recover from.

Robert Tharp
 
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