This problem pops up for me sometimes. Probably six times in the last week or so I have had a great profit on an option trade and not exited and of course you guys know what happens next! Profit gone and I have a loss. I know this is greed telling me if I hang on I can make more. I’m gonna implement an old strategy of mine which is to immediately put a limit sell order at a predetermined profit right after I enter a trade. And just let the computer do the discipline work that I can’t seem to do currently. Does anyone else struggle with us?
da-net
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Yes, I do as well John. Looking over my winning trades, I found that I lacked conviction about where price was going and exited far too early on winning trades. This resulted in leaving at lot of money on the table as well as thinking counter trend had started which was not there. I decided I needed to find something that I could have more confidence in. I am currently in training on Elliottwave + Fibonacci, but have only progressed to daily time frame with conviction. The other thing I've noticed is the market chop, requires faster decision making which has caught me a few times.
Generally speaking, failures associated with entry, exit and stopout are the result of 1) lack of understanding of how your market typically acts
and after that, not having a volume based method for determining when larger forces are stepping in to change or alter a trend move.
This is characteristic of retail traders everywhere. "Conviction" has to be based on some objective standard. Most professionals use volume
based data points. "Just having a strong feeling" does not work.
Reverse Engineering
One method for developing a better understanding of your market is to reverse engineer successful trades, and that means to work from
the high or low of a trend move back towards the point at which you would be entering. Those who try this soon discover that their target
market moves in specific increments repeatedly. It is also possible to learn how to position stop loss in the same way. Finally, skilled traders
can (also) determine whether they have a system with a reasonable statistical edge, and this is done by the same analysis of at least twenty
(20) preferably thirty (30) trades. In my market that covers about a month.
Timing
In the market I specialize in, a scalp is 3+ and a swing almost always moves in increments of +10. My typical stop is 3-4. The final key to
the puzzle for me is timing. I know the approximate time(s) at which my market is likely to move AND how long typically, the moves will
last.
Good luck
and after that, not having a volume based method for determining when larger forces are stepping in to change or alter a trend move.
This is characteristic of retail traders everywhere. "Conviction" has to be based on some objective standard. Most professionals use volume
based data points. "Just having a strong feeling" does not work.
Reverse Engineering
One method for developing a better understanding of your market is to reverse engineer successful trades, and that means to work from
the high or low of a trend move back towards the point at which you would be entering. Those who try this soon discover that their target
market moves in specific increments repeatedly. It is also possible to learn how to position stop loss in the same way. Finally, skilled traders
can (also) determine whether they have a system with a reasonable statistical edge, and this is done by the same analysis of at least twenty
(20) preferably thirty (30) trades. In my market that covers about a month.
Timing
In the market I specialize in, a scalp is 3+ and a swing almost always moves in increments of +10. My typical stop is 3-4. The final key to
the puzzle for me is timing. I know the approximate time(s) at which my market is likely to move AND how long typically, the moves will
last.
Good luck
Last edited:
sideways-sid
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Place Closing orders at your expected profit level ASAP after Opening orders fill.
If position size is sufficient, you can place orders to take risk off / reduce VaR and work up/down to your expected profit.
