How long to hold when a trade goes wrong?

[King Tut]

Thanks for the replies and advice so far re; doing this full or part time. Its excellent advice and I shall be taking it on board.

I have one question regarding trades. Since its another topic, I thought it best to start a new thread.

The question is how long do you guys hold on for if you get the trade wrong? This is the one question that I would really like to know.

Initially, my strategy was to buy at a price that made sense short and long term. The time period would ideally be for the very short term but if the trade didn't play out as I expected, I would hold knowing the price made sense on a long term view (on fundamentals).

I think this view is naive. If I was to have an exposure of 100K, that's £140 per week in interest for every week I keep the CFDs. That's capital I cant afford to lose. So my plan is to close positions within a day even if it means a loss. By keeping trading to just 5 stocks, I should be able to trade more gains than losses. I only need a 1% move to make £1000 on a 100K trade.

For the experienced traders - do you hardly ever get it wrong after building the requiste experince/knowledge? What do you do if you do?

BTW I hate stoplosses. You might wait weeks for the stop loss to be triggered and then you've sold at a greater loss and incurred the extra interest.

Does anyone have any comments/thoughts suggestions?

 

[adrianallen99]

>>>>>The question is how long do you guys hold on for if you get the trade wrong?

Everyone has losing trades, it is part of trading life, you set a stop and stick with it. If it hits your stop and loses you money it hasn't gone wrong.

>>>>>Initially, my strategy was to buy at a price that made sense short and long term. The time period would ideally be for the very short term but if the trade didn't play out as I expected, I would hold knowing the price made sense on a long term view (on fundamentals).

Fine, stick with your stops and if it starts to move up, great.

>>>>I think this view is naive. If I was to have an exposure of 100K, that's £140 per week in interest for every week I keep the CFDs. That's capital I cant afford to lose. So my plan is to close positions within a day even if it means a loss. By keeping trading to just 5 stocks, I should be able to trade more gains than losses. I only need a 1% move to make £1000 on a 100K trade.

When you make a trade, you need to take into account Commission, Interest, etc.. If you can't afford to lose/pay these, then trade smaller amounts. You should be able to afford to lose all your capital. If I lost all my capital tomorrow, it would be a pain, but it would have no impact on my standard of living. Don't just close a position to avoid paying interest - you still will pay commission and just end up throwing money away. It is fine to set a time limit though - when I traded stocks, I use to say if a position hadn't moved into profit after 3 days, I would relook at the position and make a decision to hold or sell.

>>>>For the experienced traders - do you hardly ever get it wrong after building the requiste experince/knowledge? What do you do if you do?

Experienced traders accept they have got it wrong, they get out and they move on.

>>>>BTW I hate stoplosses. You might wait weeks for the stop loss to be triggered and then you've sold at a greater loss and incurred the extra interest.

You will love them if you only lose £100's instead of £1000's.


All of the above is just an opinion and Im sure other people have different ideas, Ive never traded CFD's so cant comment on some of the issues.

 

[Trader333]

This issue is not about being right or wrong in a trade it is about having a plan for any eventuality and executing it depending upon what it is that happens. If you execute your plan then you have done the right thing whether it is a profitable trade or otherwise.


Paul

 

[TheBramble]

King Tut - You have an entry price and two exit prices.

One exit is a stop - if the trade goes against you and hits that predetermined level - you get out. No second-thoughts. No hesitation.

The other is your target price. Which can either be an absolute value or as a trailing stop.

There are no 'wrong' trades or losing trades. The only wrong ones are the ones that you enter or exit outside of your criteria - whatever they may be.