Newbie dilemma

[dimsdaletraders]

Allright Tess, what decision did you come to re. your positions?

I took the profits, which after MFG's spread were 18 pips on one and 27 on the other. The right decision in one case, as it's now falling, the wrong decision in the other....its still heading north and has made another 12 pips this morning.

I'm definitely starting to think I'm over-cautious on exit points/targets. I end up taking small profits to avoid a loss, even tho I've already allowed for the 1% risk in my plan. This is about the third trade I've taken the profit on, then watched it soar. I'm managing the "risk" part okay, but I think I need a better strategy for my overall money management.

 

[timsk]

I took the profits, which after MFG's spread were 18 pips on one and 27 on the other. The right decision in one case, as it's now falling, the wrong decision in the other....its still heading north and has made another 12 pips this morning.

I'm definitely starting to think I'm over-cautious on exit points/targets. I end up taking small profits to avoid a loss, even tho I've already allowed for the 1% risk in my plan. This is about the third trade I've taken the profit on, then watched it soar. I'm managing the "risk" part okay, but I think I need a better strategy for my overall money management.

Hi Tess,
Welcome to T2W.
The problem you face is one every trader has to grapple with sooner or later, so you're not alone! The most common solution is to exit a part of your position at some juncture, then move your stop loss on the remaining portion to B/E or better and then let the other half run. However, it's easier said than done. I did exactly this for a long time when day trading US equities last year. However, after a while, I realised that on average, I exited the second portion of the trade for less profit than the first portion and that I would have been better off getting out in one hit. So, if you decide to explore this well trodden route, you'll have to test it on a good body of trades to ensure that, on average, it pays to do so in the long run. As a broad rule of thumb, an exit strategy of this type is ideal for trend trading and less appropriate for trading rangebound markets.
TIm.

 

[Black Swan]

I took the profits, which after MFG's spread were 18 pips on one and 27 on the other. The right decision in one case, as it's now falling, the wrong decision in the other....its still heading north and has made another 12 pips this morning.

I'm definitely starting to think I'm over-cautious on exit points/targets. I end up taking small profits to avoid a loss, even tho I've already allowed for the 1% risk in my plan. This is about the third trade I've taken the profit on, then watched it soar. I'm managing the "risk" part okay, but I think I need a better strategy for my overall money management.

IMO you'll get over that, it's done, move on and look for next opportunity. I used to get a tad annoyed with myself if I put an overnight or 'away from the pc' limit of 100 pip profit on, for example, cable to then come back and see it had soared to 150 pips....but rules are rules, I simply wait for the swing.

 

[dimsdaletraders]

Timsk: thanks very much for the welcome and the advice. It was interesting to read it, I hadn't even considered that as a possible problem in a part-exit strategy, and was planning to use part-exit once I got to the stage where my stakes were large enough, so I'm going to take your advice and do some backtesting!

Black Swan: uh huh, I'll get over it *g*...first step was taking the d*mn thing off my live monitor list after I read your reply! Seriously, tho, I think I'd be fine with it happening if I knew it was because I'd stuck to a predefined exit strategy, "rules are rules", as you say...rather than just feeling like it's happened because I lost my nerve/got greedy (whichever it was!). So from now on, I don't go into a trade unless I already know much more definitely what my target is, and I'm going to spend some time tonight reading up more on that.

Barjon: Both of the stocks I had been dithering about stayed firmly in the blue while everything else headed happily south for a while! Hey ho...but yup, I would have been.

 

[barjon]

tess

blimey, i'll get this post written in a minute!!

to repeat - ftse was off around 60 after open so you were right to close.

in my view it's worthwhile developing 3 strategies:

1. A re-entry strategy
2. An exit strategy
3. An entry strategy

I know entry comes first, but I put them like that to reflect order of difficulty!!

good trading

jon

 

[ceydababy]

You're here wanting serious advice ???? GOOD LUCK

 

[timsk]

You're here wanting serious advice ???? GOOD LUCK

C'mom ceydababy - you can do better than that!
If you feel the help provided thus far is incorrect or misleading in some way, then why not point it out with your reasons why? That way, there's the potential for everyone to learn something and move forward. As it is, your post does nothing but raise doubts in people's minds - especially the OP who doesn't know you (probably), without offering any hint as to where "serious advice" may be found. It's not helpful or constructive.
Tim.

 

[Black Swan]

You're here wanting serious advice ???? GOOD LUCK

Don't you think it's interesting that as a new poster the OP received help and advice based on the delivery and content of the questions? IMO the majority of T2W posters (who consider themselves able) are only too willing to offer help/advice to those who are obviously taking this trading gig seriously...

 

[Dommo]

DD: I quote from your original post: "I've seen it said over and over, cut your losses, but let your profits run."

Your intuition is absolutely right. Although this sentiment is sensible, as (prospective, forward looking) trading advice it is absolutely, timelessly useless.

 

[Dommo]

timsk - although it goes against the stated aim of this site, I tend to agree with Ceydababy. If I have a really novel/profitable approach or insight, why (short of needing people to act in concert with me) would i put it in the public domain? Would I? Absolutely not.

And of course I realise you should excommunicate me for this post! It's ok - go ahead!

 

[virtuos0]

DD: I quote from your original post: "I've seen it said over and over, cut your losses, but let your profits run."

Your intuition is absolutely right. Although this sentiment is sensible, as (prospective, forward looking) trading advice it is absolutely, timelessly useless.

Absolutely. Cut losses/run profits is only useful in hindsight, and unfortunately no broker/dealer will let you trade the past.

To the OP, it sounds like you have the qualities it takes, but at the moment it seems that you are not playing to your strengths. You say that you are well versed in economics/current affairs, and that your husband is an IFA, if that is the case I suggest you have a good think about how that knowledge and experience might give you an advantage.

Unfortunately you need to 'unlearn' everything that that course has taught you and begin again from first principles. I suggest you go back over everything you 'think' you know and be hypercritical of it. It's easy to swallow total bull**** when it's conveyed convincingly.

 

[timsk]

timsk - although it goes against the stated aim of this site, I tend to agree with Ceydababy. If I have a really novel/profitable approach or insight, why (short of needing people to act in concert with me) would i put it in the public domain? Would I? Absolutely not.

And of course I realise you should excommunicate me for this post! It's ok - go ahead!

Hi Dommo,
It's entirely possible to have a profitable strategy AND provide useful insight that will benefit other members without giving away your secrets. Lots of members do it every day and, indeed, some have done so on this very thread. Being profitable and making helpful posts are not mutually exclusive! As you correctly point out, the whole ethos of the site is to help and support one another. I would urge strongly anyone that feels - for whatever reason - that they can't participate on that basis, to go some place else.
Tim.

 

[virtuos0]

"Cut losses/run profits is only useful in hindsight"

very useful imvho if you keep above in mind when you look at your own defined methods results

It's useless advice because it gives you no advantage. The only reason to stay in a trade is because conditions, in your judgement, are in your favour. If you rely on the 'let profits run' mantra it will keep you in as many bad trades as it does good trades, and cutting losses quickly will take you out of as many good trades as it takes you out of bad trades. In other words, it's a zero-sum, and therefore useless. In the same way that altering risk/reward is a zero-sum with win rate. If you improve risk/reward ratio you reduce win rate.

It's all a monumental edifice of bull**** spewed out by the industry to keep the losers losing, and all y'all are on the hook like lil fishies.

 

[tenbobtrader]

your describing a trader who reads the market and condition to a very very high standard who is aware the second he is offside

good post VirtuosO ...... carry on please .......

this is a Newbie dilemma Q

most newbie's do not run their own method to judged targets or even close

most newbies do the exact opposite in fact and watch the loser run to a good profit for the broker or sb firm

 

[Claudia123]

This all correct tenbob - but for a 'newbie' this is the price of education/discipline etc. I know when I started 5 or 6 years ago I was doing all you said. It takes time and unfortunately money to learn Imo. Most of the advice is on the forums free - but how many ignore it ? I did lol.

 

[barjon]

Virtuoso

I assume you seek to maximise your gains when "conditions, in your judgement, are in your favour" and minimise your lossses when they are not? If so, is that not in tune with the mantra?

good trading

jon

 

[virtuos0]

Virtuoso

I assume you seek to maximise your gains when "conditions, in your judgement, are in your favour" and minimise your lossses when they are not? If so, is that not in tune with the mantra?

good trading

jon

I do indeed "seek to maximise my gains and minimise my losses", but that is a completely different thing to "run your profits and cut your losses". In fact in many cases due to the nature of the market those two things can be the polar opposite of each other.

 

[ceydababy]

Don't you think it's interesting that as a new poster the OP received help and advice based on the delivery and content of the questions? IMO the majority of T2W posters (who consider themselves able) are only too willing to offer help/advice to those who are obviously taking this trading gig seriously...

The consider themselves able is the interesting part. Who know's if they're able ?? Anyone can be "Charlie Large Spuds" on the WWW. 80% of people lose money I don't see the populus of this board being any different.

So as a new trader would you want to take advice from someone who can't necessarily do it themselves ?

Plenty of people can talk the talk I would imagine most don't walk the walk therefore you might as well read a book. The other option is listening to some random on a website who probably spunks dough Capital Spreads direction every week but will dispense advice like a protege of George Soros on a daily basis. I know what I'd trust more.

The more amusing dilema comes when you have 20 different answers to the same question. Then it's a case of who's right and who's wrong especially if you are new !! I've seen this happen many a time on here.

 

[meanreversion]

It's entirely possible to have a trading strategy with a risk/reward ratio of 1:2 or greater, i.e. risk 2 units to make 1. This can lead to a nice smooth equity curve, the drawback is the leverage is consequently reduced.

 

[meanreversion]

Rather than "maximise gains, minimise losses", how about aiming for a strategy with bearable drawdown and positive expectancy with sufficient likelihood of trade occurence.. ?