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Hold Hold Hold
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Created: by jonc Attachments:0

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Hold Hold Hold

  #11 (permalink)
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redratsal View Post
Also, if you're coherent with your rules and apply them constently without changing your strategy too often, a good help is offered by backtesting and looking at the MFE (Maximum Favorable Excursion). It can help and gain confidence with pscyological factors and sharpen your runs on profit. Have a look also to MAE (Maximum Adverse Excursion) in order to sharpen your stoploss. These two factors better apply to automated strategies but they can offer a good starting point.

Also, while it wouldn't really be backtesting per se, you do have all the data you would need to do some scenario analysis in excel or a similar program. Taking your execution times/price and either seeing what would happen if you held for a certain time longer or what would happen to the win rate if held until a certain price, ect..

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  #12 (permalink)
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jonc View Post
I realized I always want to take profit when I'm slightly in green. Only to see the price run 2 to 3 times or even 10 x in my direction after I took profit.

Any idea how to fix this? How can I hold and let my profit run instead of taking small profit.


Quite simple...

Trade the market, not your P&L!

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  #13 (permalink)
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Sounds like you're dealing with a psychological hurdle which is one of the most common issues traders deal with when starting out and is easy to overcome. There's some great ideas posted here to help you by other members. I would add this, have you considered or can you afford to trade more than 1 contract? If so, provided it fits within your risk parameters, consider scaling out of your trade as it works in your favor. Figure out maybe an initial target that would give you a risk-free trade and manage the remaing position(s) with as someone else mentioned, adding a variable moving average or whatever MA you prefer. Tweak the setting/period specific to the market you're trading so that it allows you to get the most out of the move. Maybe having a trailing stop a few ticks away from the MA to allow for good wiggle room.


Last edited by Private Banker; January 8th, 2011 at 02:04 PM. Reason: Typo
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  #14 (permalink)
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Private Banker View Post
Sounds like you're dealing with a psychological hurdle which is one of the most common issues traders deal with when starting out and is easy to overcome. There's some great ideas posted here to help you by other members. I would add this, have you considered or can you afford to trade more than 1 contract? If so, provided it fits within your risk parameters, consider scaling out of your trade as it works in your favor. Figure out maybe an initial target that would give you a risk-free trade and manage the remaing position(s) with as someone else mentioned, adding a variable moving average or whatever MA you prefer. Tweak the setting/period specific to the market you're trading so that it allows you to get the most out of the move. Maybe having a trailing stop a few ticks away from the MA to allow for good wiggle room.


Thanks guys for all the ideas. This method suggested by Private Banker I believe is the most suited for me. It help to know that I have locked in some profit and can let the remaining run.

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  #15 (permalink)
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redratsal View Post
Also, if you're coherent with your rules and apply them constently without changing your strategy too often, a good help is offered by backtesting and looking at the MFE (Maximum Favorable Excursion). It can help and gain confidence with pscyological factors and sharpen your runs on profit. Have a look also to MAE (Maximum Adverse Excursion) in order to sharpen your stoploss. These two factors better apply to automated strategies but they can offer a good starting point.

Hi redratsal, this is a great idea. this might sound weird - my trading method do rely heavily on MAE in an inverse way for entry

Is anyone aware if there are any indicators which involve MFE (Maximum Favorable Excursion) and MAE (Maximum Adverse Excursion)?



sharmas View Post
Jonc

not sure about your method and chart set up, however try to add AaZlema Vma indicator and make VMA line transperent.

See if that assists you with staying in the trade for longer.

Sharmas what is the AaZlema Vma indicator? I don't seems to be able to find any info on this.


Last edited by jonc; January 9th, 2011 at 07:17 AM. Reason: add question
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  #16 (permalink)
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sharmas View Post
Jonc

We spoke awhile ago and you seemed to be going through this issue.

how confident are you with your methods and entry

have you got a defined Business Plan and also how many successful trades have you had in Sim with strict entry and exit strategies

Do you enter the market with predefined profit and stop targets.

not sure about your method and chart set up, however try to add AaZlema Vma indicator and make VMA line transperent.

See if that assists you with staying in the trade for longer.

Let me know and email me, i am based in Auckland.

sharmas

Hello @Sharmas,

I trade 6E, 6B, CL, TF, GC. I was wondering what your suggested settings for the AaZlemaVMA indie would be for each of those.

TIA,

Rick

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  #17 (permalink)
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jonc View Post
I realized I always want to take profit when I'm slightly in green. Only to see the price run 2 to 3 times or even 10 x in my direction after I took profit.

Any idea how to fix this? How can I hold and let my profit run instead of taking small profit.


There's nothing wrong in taking profits. My motto is, "You can't go broke taking profits." You're issue is the "could of should of" syndrome....I could have done this...or I should have done that...and it's always AFTER the FACT.

If your system gave you a signal to enter, and then it gave you a signal to exit for a PROFIT. Then that is a good system to have. Now if you are QUESTIONING your system to why that's all it gave, then it's up to you to work on your system and to improve on it. And improve on yourself as a trader to read it Profitably.

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #18 (permalink)
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rtrade View Post
There's nothing wrong in taking profits. My motto is, "You can't go broke taking profits."

I used to say the same thing. I no longer say it, you can in fact going broke taking profits and I think that it almost encapsulates exactly how a large number of traders do go broke -- they consistently feel the need to take a smaller profit just to ensure it isn't a loss, and then at the end of the day, week, month, or year, their winning trades are much smaller than their losing ones - and they've lost money.

You also have to consider that if you trade just three times a day, with 3 lots per trade, that is 9 round turns a day or approximately 1,800 round turns a year (based on 200 trading days). At a rough cost of $5.00 per rt in commission, you've spent $9,000 just on commissions.

If you have a $20,000 trading account, even if you broke even on the year from a gross trades perspective, almost half of your account is now gone after commissions.

Mike

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  #19 (permalink)
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Big Mike View Post
I used to say the same thing. I no longer say it, you can in fact going broke taking profits and I think that it almost encapsulates exactly how a large number of traders do go broke -- they consistently feel the need to take a smaller profit just to ensure it isn't a loss, and then at the end of the day, week, month, or year, their winning trades are much smaller than their losing ones - and they've lost money.

You also have to consider that if you trade just three times a day, with 3 lots per trade, that is 9 round turns a day or approximately 1,800 round turns a year (based on 200 trading days). At a rough cost of $5.00 per rt in commission, you've spent $9,000 just on commissions.

If you have a $20,000 trading account, even if you broke even on the year from a gross trades perspective, almost half of your account is now gone after commissions.

Mike


Hey Mike, Happy New Year to ya!!!

Ok, I hear what you're trying to say, there's nothing but positive vibe with that statement I said. You're interjecting your experience and wisdom as a trader AFTER that statement. If you were to just take profits and no loss how can you lose. And we all know you need to have a system that tells you your entry and exits.

So if this trader is not using his/her exit point based on his/her system and is exiting too soon, then he/she needs to trust his/her system more. And if he/she does exit too soon and with a profit, then, don't BEAT yourself up too much...look at the positive side of things...you have a profit...it's better than a lost. That's all I'm saying .

An example right now is what I posted on the eur/usd chat room. I'm practicing spot/swing trading based on the daily chart. I entered the market and was up $80.00, as a day trader I would have taken profit, but since I'm swing/spot trading I have to practice holding for a few days if not just one day. I watched my $80.00 profit disappear to a staggering -$300.00...unacceptable for my DAY trading rules. Then I watched it run up back to a +$300.00 profit, once again as a day trader I would take that profit, but I'm not. Now currently I'm at a -30.00 disadvantage.

But my trading plan is using the 50% trading retracement from it's move from Jan 4th of the this year. So could I have taken an early profit and NOT execute my plan...sure, but I want to see my plan work, if it does...I want to see my SYSTEM work...give it a chance for it to prove itself to me...otherwise, it's back to the drawing board.

"Faith is the substance of things hoped for, the evidence of things not seen." --- "Therefore, I Believe it and I will see it. And every day and in every way, I am healthier, wealthier, and wiser."
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  #20 (permalink)
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Big Mike View Post
I used to say the same thing. I no longer say it, you can in fact going broke taking profits and I think that it almost encapsulates exactly how a large number of traders do go broke -- they consistently feel the need to take a smaller profit just to ensure it isn't a loss, and then at the end of the day, week, month, or year, their winning trades are much smaller than their losing ones - and they've lost money.

You also have to consider that if you trade just three times a day, with 3 lots per trade, that is 9 round turns a day or approximately 1,800 round turns a year (based on 200 trading days). At a rough cost of $5.00 per rt in commission, you've spent $9,000 just on commissions.

If you have a $20,000 trading account, even if you broke even on the year from a gross trades perspective, almost half of your account is now gone after commissions.

Mike

This the very reason why I see the need to be able to hold. I am actually able to have >60% correct entries but looking at the small profit I am taking, one wrong trade can wipe away the profit from multiple right trades.

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