Secret of ProfitableTrading is ...

[Justice League]

riding your winners and cutting your losses. Whatever strategy you employ, this is the only way to win at trading.

 

[FetteredChinos]

actually, it is keeping an open mind, and not adherring to preconceived notions and traditions..

 

[jimmy1jag]

actually, it is keeping an open mind, and not adherring to preconceived notions and traditions..

and knowing your psychological strengths and weaknesses

and putting your trading plan together which allows you to benefit from the strengths and minimise on the weaknesses. I.e it fits you! It's your niche!

and getting your emotions out of your trading

and proving that your plan gives you a profitable edge you have confidence in

and sticking to your plan

and doing what FC says.

Apart from that, it's a piece of .... as Bobby Ball would say.

 

[FXSCALPER2]

riding your winners and cutting your losses. Whatever strategy you employ, this is the only way to win at trading.

The ONLY way?

 

[tireg]

buy low sell high

 

[tetoncambria]

I know and I understand that the only way is to cut your losses and ride out the profits, but when I analyze my trades. I am still not doing that to the extent that I should. I have started trading strictly with stop-losses in order to cut my losses and that has really helped. I still have problems with my profit targets, I knkow that I will get better with time, but I feel there is something else I am missing. How does one let their profits run? I know this is vague but would appreciate any advice.

 

[wasp]

I know and I understand that the only way is to cut your losses and ride out the profits, but when I analyze my trades. I am still not doing that to the extent that I should. I have started trading strictly with stop-losses in order to cut my losses and that has really helped. I still have problems with my profit targets, I knkow that I will get better with time, but I feel there is something else I am missing. How does one let their profits run? I know this is vague but would appreciate any advice.

Practise, experience, time and maybe even a trailing stop whilst you build up your confidence...

 

[nine]

I know and I understand that the only way is to cut your losses and ride out the profits, but when I analyze my trades. I am still not doing that to the extent that I should. I have started trading strictly with stop-losses in order to cut my losses and that has really helped. I still have problems with my profit targets, I knkow that I will get better with time, but I feel there is something else I am missing. How does one let their profits run? I know this is vague but would appreciate any advice.

I don't agree with the original poster that letting your wins run is the only way to be successful. The alternative of having smaller winners than losers but many many more wins than losses is also very effective for some.

Teton, the easiest way to let your winners win is probably to divide your trade quantity up into 2 or 3 parts. Take the first 1/3 off at a close target (one that you'll reach 80% of the time say). Take the second 1/3 off at a more distant target (one that you'll reach 60% of the time) and then move your stop to break even on the final 1/3. This should now be a free trade and you can move your stop up gradually with the market until the run stops running.

Record each 1/3 seperately and find out which provides the best profits and under what initial market conditions to give you insight into how you should set your targets/stops in future.

 

[dc2000]

Forget all this ride your winners and cutting your losses stuff. In truth this is very very hard for someone new to trading to do. Try to let profits run and you are more likely to let a winner become a small winner or a loser as the market retraces. Try and cut your losses and you will jump off as the market whipsaws before going into profit.

Both Chrisw and Kiwi have mentioned ways to trade that should help in a bid to become profitable for my own contribution there are two golden rules

1: Be realistic in you expectations
You dont have to bag every single point on offer to provide a decent living, look for a reasonable return for the capital risked.

2: Protection of capital is paramount for profit
As a trade goes in your favour move your stop to breakeven or to lock in profit.

 

[tetoncambria]

I don't agree with the original poster that letting your wins run is the only way to be successful. The alternative of having smaller winners than losers but many many more wins than losses is also very effective for some.

Teton, the easiest way to let your winners win is probably to divide your trade quantity up into 2 or 3 parts. Take the first 1/3 off at a close target (one that you'll reach 80% of the time say). Take the second 1/3 off at a more distant target (one that you'll reach 60% of the time) and then move your stop to break even on the final 1/3. This should now be a free trade and you can move your stop up gradually with the market until the run stops running.

Record each 1/3 seperately and find out which provides the best profits and under what initial market conditions to give you insight into how you should set your targets/stops in future.

Thanks Kiwi... that is some great advice - I will try that out. And thank you as well dc. All great advice.

 

[Charlton]

I know and I understand that the only way is to cut your losses and ride out the profits, but when I analyze my trades. I am still not doing that to the extent that I should. I have started trading strictly with stop-losses in order to cut my losses and that has really helped. I still have problems with my profit targets, I knkow that I will get better with time, but I feel there is something else I am missing. How does one let their profits run? I know this is vague but would appreciate any advice.

Is the problem that you are hitting your stop losses too soon ? If there is too much volatility in your stock you may well hit the stop within the day's normal range. If you have bought long based on, for example, a rising triangle followed by a breakout then at the apex of the triangle you could place your stop just below the lower trend line. At the apex of the triangle the volatility is at its lowest. As the price rises during the breakout there may well be more volatility as the battle between buyers and sellers ramps up, so if the stop is moved too soon it is more likely to hit. If you let the stock run for a while or alternatively use a large % you could move it up/decrease the % as the volatility and the battle between buyers and sellers stabilises

It may be worth analysing the volatility of trades you have made during these profit runs over the period of the run to see if this is the case and to alter your stop policy accordingly

 

[dbphoenix]

Is the problem that you are hitting your stop losses too soon ? If there is too much volatility in your stock you may well hit the stop within the day's normal range. If you have bought long based on, for example, a rising triangle followed by a breakout then at the apex of the triangle you could place your stop just below the lower trend line. At the apex of the triangle the volatility is at its lowest. As the price rises during the breakout there may well be more volatility as the battle between buyers and sellers ramps up, so if the stop is moved too soon it is more likely to hit. If you let the stock run for a while or alternatively use a large % you could move it up/decrease the % as the volatility and the battle between buyers and sellers stabilises

It may be worth analysing the volatility of trades you have made during these profit runs over the period of the run to see if this is the case and to alter your stop policy accordingly

Hmm. Seems you're not quite the rookie you implied in your other thread. Hope my suggestions there are of some value nonetheless.

--Db

 

[Splitlink]

How to get that entry that rides the way you are going almost at once, so that the stop can be raised into profit quickly. That is what I like to do. How to do that, all the time, though.......

I had a problem yesterday. Had a computer bust. Take that into consideration, too

Split

 

[TheBramble]

It may be worth analysing the volatility of trades you have made during these profit runs over the period of the run to see if this is the case and to alter your stop policy accordingly

This is good advice. Using current Volatility as a dynamic in establishing a stop is far more sensible, not to mention effective, than using a fixed value or percentage.

It's like driving a car on a motorway. The distance between you and the car in front is normally a function of your speed and how much traffic there is.

Unless it's the M25...