Having trouble letting my winners run

[Phoenix01]

Ever since i started trading i have had a problem of letting my winners run. It means overall i end up with far greater average loss per trade than average profit per trade. From review this is the only thing preventing me from becoming a profitable trader because my entries are pretty good.

I usually get out the first instance there is a weakness in following candle. Ive noticed that just before a big move the market seems to throw out a candle hinting to a reveral before it goes steaming in the direction you traded in.

Iam backtesting a system which means that when i enter i pull up a 2 minute chart and get out at the first candle in the opposite direction to my trade (Thats how bad i am at letting them run). This system would have meant i would made 45 point profit today instead of a 17 point loss.

What do people think? Have they any suggestions for a system. I dont mind having a few more small losing trades, if i can let thoses winners run.

Omar

 

[kbit]

Without knowing what your doing exactly all I could recommend is go to a 5 min bar and put your stop under previous and trail

 

[T.O.M]

I'm using a system/pattern for trading and so far more than 95% of the trades went the way it pointed me out. the main problem on the system was me not being disciplined ...and some more analysis maybe.
so maybe the same is happening to you

 

[Shakone]

1)Go back to demo trading and build some confidence in your system and confidence in letting winners run. Do you have a clear system for when to take profits? if not, get one.
2)When you get to the point that you are feeling edgy (the first down candle) take off 75% of your profits, and let 25% run or take off 90% and let 10% run, whatever amount you can handle, and then once you see how much that 10% can make, you'll start to want to let more than 10% run.
3)You're able to get out of winners early and cut you average winner down. Try to learn to get out of losers early, and reduce your average loss.
4) Make sure that when you do trade, you're not risking more than you can handle. If you're not following your strategy, lower the % you are risking until you canfollow your strategy

 

[barjon]

first make sure that you're not imagining things.

look at all your "winning" trades and establish the maximum potential that was in the move before price came back to knock out your stoploss (or your trading timescale was exhausted). Express that potential in terms of your initial risks (R:R) and look at the distribution. Do the same for your actual R:R achieved and compare the two. That'll tell you the extent of your problem.

When you look at the potential R:R distribution you might find that you've got a nice Bell curve with the bulk sitting in the 1:2 (say) range. And that would give you a good expectation to work with (which you could use on a "set it and forget it" basis if you wanted).

'Course, as Shakey says, establishing clear exit criteria is the key.

jon

 

[intradaybill]

Automate your system

 

[Phoenix01]

1)Go back to demo trading and build some confidence in your system and confidence in letting winners run. Do you have a clear system for when to take profits? if not, get one.
2)When you get to the point that you are feeling edgy (the first down candle) take off 75% of your profits, and let 25% run or take off 90% and let 10% run, whatever amount you can handle, and then once you see how much that 10% can make, you'll start to want to let more than 10% run.
3)You're able to get out of winners early and cut you average winner down. Try to learn to get out of losers early, and reduce your average loss.
4) Make sure that when you do trade, you're not risking more than you can handle. If you're not following your strategy, lower the % you are risking until you canfollow your strategy

I think taking off most my position when the first candle goes against me and then letting the rest of the position run would work. Its just i trade futures and that would mean i would have to buy 2 contracts. Which on the FTSE100 would mean £20 every pip, currently only trading one contract. However iam cut losers quiet short so my 2 contracts would not be risky if it allowed me to run positions.

Thanks

 

[DHB]

Consider using a fixed TP for a while until you get more comfortable letting winners run. Get out at the first sign of trouble like you do now, but as soon as you have moved your stop to BE and set your TP, your job babysitting the trade is over and you should get away from the computer and let the market do its thing. You can't lose anymore, you can only break even or win. Not a bad situation to be in eh?

 

[FuturesDog]

Ever since i started trading i have had a problem of letting my winners run. It means overall i end up with far greater average loss per trade than average profit per trade. From review this is the only thing preventing me from becoming a profitable trader because my entries are pretty good.

I have the same problem, but leting winners run is harder than you think. If I try to let the profits run I always end up with even more losses. The problem is you need a strong trend for this.

 

[HowardCohodas]

A trading system has at least two sets of rules or perhaps three. The rules for entering a trade. The rules for managing the trade (optional). The rules for exiting a trade. Many assume the rules for exit are the mirror image for the rules of entry. I've never found this to be true. YMMV.

I've never found a shortcut to qualifying a trading idea I've developed. I'm a retired engineering manager so my analogy will parallel that background.

• Computer Simulation (Backtesting)
• Prototype (Paper Trading)
• Preproduction (Trading for small money)
• Production (Let'r rip)

This is only the short form of the explanation of my system qualification process. The longer form contains material on the inherent limitations of backtesting and paper trading.

Every time I thought the insight I had did not need the full qualification process I lost money. Not some times. Every time. YMMV, but I have my doubts.

 

[glyder]

Maybe you can try to split your position into 2 (or even 3) tranches.
When you hit 30-50 points in profit take profits by closing half position. Move your stop to break even.
Let the 2nd half run or be stopped out at B/E whichever happens. I sometimes do this but only on 4 hr+ TF trades where I have an expectation of a runner.
It might be tricky on low TF trades.

 

[malaspina]

Ever since i started trading i have had a problem of letting my winners run. It means overall i end up with far greater average loss per trade than average profit per trade. From review this is the only thing preventing me from becoming a profitable trader because my entries are pretty good.

I usually get out the first instance there is a weakness in following candle. Ive noticed that just before a big move the market seems to throw out a candle hinting to a reveral before it goes steaming in the direction you traded in.

Iam backtesting a system which means that when i enter i pull up a 2 minute chart and get out at the first candle in the opposite direction to my trade (Thats how bad i am at letting them run). This system would have meant i would made 45 point profit today instead of a 17 point loss.

What do people think? Have they any suggestions for a system. I dont mind having a few more small losing trades, if i can let thoses winners run.

Omar

Hello Phoenix01,

I will tell you what I do, this is my very personal procedure and it is based on my personality, maybe it can help you. When I enter the trade I place my stop loss in the area where the market is holding the price (last pullback, if long) then if the price goes strong my way (at least 4 points) I move my stop loss to my entry area + 0.5 points, the worst that can happen is the market pulling back strong to hit my stop (In this case, I do not lose anything). If the play is still with me I start taking profits in waves, as soon as I see any volume capitulation I sell part of my position, if the trends continues I move my stop to the last area of support and keep taking profits in volume capitulation areas until I sell all my contracts or the market hits my stop and takes me out.

By the way, I only day trade the emini NASDAQ-100 index future. (That´s all I trade).

I hope this helps.

Take care.

 

[foroom lluzers]

Most traders tend to take gains early out of fear that they will evaporate quickly. You need patience and walk away from short term screen movements.

 

[-Catalin-]

@ phoenix

I am in the same boat emotionally. If i put something on and watch it tick by tick, I can guarantee I would get in the way of a good trade. My way of dealing with it is have stop and limit in place (that make sense given the ATR) and let it be. If you worked out what ratio you need for you strategy to be successful, you're almost there, best of luck.

 

[tomorton]

Stops good, limits bad.

Once you can trade, trade like you actually want to make money.

 

[-Catalin-]

Stops good, limits bad.

Once you can trade, trade like you actually want to make money.

I agree but I just can't do it and believe me i tried. I currently only work one setup and 2:1 works fine, I just wish we had more volatility so I could put it on more often.

 

[tomorton]

Well yes its hard, that's why its called the 90% club.

Look at this. You enter a strong uptrend, long, after a pull-back. However you do it, you give the set-up 60% as a potential trade. So, great, price goes up. Then it slows a bit, and goes sideways a bit and then starts to go up again. Now you find you're giving the new set-up 75%. This means, if you weren't in it already, you'd definitely be buying here. So why let a limit order take you out?

 

[-Catalin-]

Well yes its hard, that's why its called the 90% club.

Look at this. You enter a strong uptrend, long, after a pull-back. However you do it, you give the set-up 60% as a potential trade. So, great, price goes up. Then it slows a bit, and goes sideways a bit and then starts to go up again. Now you find you're giving the new set-up 75%. This means, if you weren't in it already, you'd definitely be buying here. So why let a limit order take you out?

I appreciate your help but my setup is not PA dependent and I don't judge it that way at all. Maybe I didnt make it clear, my system works despite my personal issues.

 

[tomorton]

I appreciate your help but my setup is not PA dependent and I don't judge it that way at all. Maybe I didnt make it clear, my system works despite my personal issues.

Its OK, the focus on PA is purely my imposition. But the example is applicable across other styles. Imagine Warren Buffet telling his shareholders, "We've started getting great dividends from XYZ Inc. so we're going to sell the company. But we're keeping ABC Inc. because their dividends are poor".