Would you stick to your trade even when a loss seems imminent?

[Amatrue]

say you enter a trade given by a signal/setup and have your profit and stop orders attached, then price action begins to go against you and you believe you are likely to be stopped out of the trade. Would you close your trade or wait for it to hit your stop?

I understand that manually closing a potentially losing trade makes your stop redundant, but sometimes when something unexpected happens it feels like additional loss on the trade could be prevented.

 

[kmiklas]

say you enter a trade given by a signal/setup and have your profit and stop orders attached, then price action begins to go against you and you believe you are likely to be stopped out of the trade. Would you close your trade or wait for it to hit your stop?

I understand that manually closing a potentially losing trade makes your stop redundant, but sometimes when something unexpected happens it feels like additional loss on the trade could be prevented.

You know what's going to happen, right? The moment after you bail out, it will U-turn and move back where you would have been.

Ultimately it sounds like you don't trust your system. Set your stops and trust, or pick a different system.

 

[systematictrader]

yes stay even if a loser because on average the other times you get theat feeling its gonna be a winner and eventually they balanec each other out financially speaking but you end up losing more stress and mental capacity trying to pick these "feelings" thus if your system has a stop already just follow it and dont overthink it, most importantly missing out on a gain that you yourself caused causes this reverberating effect that haunts you a lot more than taking a loss, think of for example trading through a certain event

 

[Millionaire]

Trading Discipline!

This is what differentiates a Pro 100% mechanical system trader from an Amateur wannabe 100% mechanical system trader.

The Pro is on the golf course and doesn't care if the system loses or wins on the current set of trades, even if he had a strong feeling about the current trades being losers. He knows there will long periods when the system doesn't make money and thats all an expected part of the system design.

The Amateur is glued to his screen and ready to interfere with the system because it is on a losing streak and he cant handle the pain of anymore losses.

This interference will just make the losing streak last even longer, in fact he will just end up abandoning the system and start changing its parameters or start playing other 'games', effectively throwing all discipline out the window.

The Pro has developed a discipline hack, he doesn't even look at the trading screen during the day. Although he might need some discipline to not do this. The temptation is to look at the screen if you are bored and have nothing to do. This serves no useful purpose except entertainment to alleviate boredom. But can prove very expensive. Cheaper to find a hobby that keeps you busy.

 

[Handle123]

You discussing two different entities, am still long stocks from 2009, last year automation I programmed saw topping formations, I make huge dividends based on 2009 entry prices, so I hedge with ES futures which I hedge with options from futures and spiders. Market drops, losing nada in the overall in positions, program liquidates week after bottom and market goes back up. Program was also heavily short index futures/hedged as past 4 years seeking top. Made profits on only target as 10% was liquidated and rest stopped out at breakeven, yes, gave back much but this is what system does as I seek very long term trading.

Now if you talking about something you just got into, learn to hedge.

 

[smallfil]

I use stop losses because it makes your trading as mechanical or help you trade like a robot like you should. It teaches you discipline and if you have a stop loss, you should not be baby sitting it and panicking each time your stop loss is hit. Stop losses need to be raised as profits pile up and not ever moved backwards. Proper risk management and position sizing where you risk no more than 2% or 1% if you are a newbie, of your capital, should take care of your fear of losing monies.

 

[Heydrrich]

Trading Discipline!

This is what differentiates a Pro 100% mechanical system trader from an Amateur wannabe 100% mechanical system trader.

The Pro is on the golf course and doesn't care if the system loses or wins on the current set of trades, even if he had a strong feeling about the current trades being losers. He knows there will long periods when the system doesn't make money and thats all an expected part of the system design.

The Amateur is glued to his screen and ready to interfere with the system because it is on a losing streak and he cant handle the pain of anymore losses.

This interference will just make the losing streak last even longer, in fact he will just end up abandoning the system and start changing its parameters or start playing other 'games', effectively throwing all discipline out the window.

The Pro has developed a discipline hack, he doesn't even look at the trading screen during the day. Although he might need some discipline to not do this. The temptation is to look at the screen if you are bored and have nothing to do. This serves no useful purpose except entertainment to alleviate boredom. But can prove very expensive. Cheaper to find a hobby that keeps you busy.

To me this is very much linear thinking. When the opportunity arises you go in big, if it is unclear you stay small etc. etc. Also I guess it depends on the system you employ, and the type of trader that you are.

 

[Millionaire]

To me this is very much linear thinking. When the opportunity arises you go in big, if it is unclear you stay small etc. etc. Also I guess it depends on the system you employ.

I was talking about 100% mechanical systems. Once you bring in any discretion, even position sizing discretion, its not 100% mechanical anymore.

The only reason to override a purely mechanical system is if things get overly risky. eg there is risk of getting badly stuck in some locked limit situation.

 

[bone]

If you’re swing trading - being underwater is a reality. Could be for hours or days - but the bigger the target and the longer the timeframe you’re modeling that’s just part of it.

Even when I traded at higher frequencies on the pit and on the screen earlier in my career - it just wasn’t reasonable to think that you weren’t going to take some heat on a position.

 

[Grantx]

If you’re swing trading - being underwater is a reality. Could be for hours or days - but the bigger the target and the longer the timeframe you’re modeling that’s just part of it.

Even when I traded at higher frequencies on the pit and on the screen earlier in my career - it just wasn’t reasonable to think that you weren’t going to take some heat on a position.

How many trades were you taking per day on average when you were in the pits? How different is you trading now?