Letting Profits Run Part 3
Now, let's get back to the question at hand. When do we hold and when do we take em faster. I've hopefully demonstrated that this is a function of a certain system, but moreso a function of yourself at any given interval. If you are a trader that is developing a plan, developing confidence in your plan and in a learning phase, these little trades help to build the confidence. If you are a trader near my level of trading, where you still fight your ego everyday, you take smaller profits when you are regaining the confidence you for some reason lost. If you are completely emotionless robot, congratulations, I hope to be you someday. Once the evaluation of yourself is that you are able to take these little profits with no problem, then it's time to progress to a next level. This level includes being able to stay in the zone with a stock, listening to what it's telling you, keeping a constant relationship with it and, allowing yourself to take more out of it than you would if you were just regaining or building confidence. Remember this small point though. Many times the stock that you are in tune with says to take smaller profit full position so you must listen to that too.
Do not fall into the trap that your ego sets. You are doing so well, you are gaining confidence, it's okay to hold all trades for higher profits. This is wrong approach. The method is still apart of the trade and its you that needs to listen to the stock at any certain interval. So, let's assume we have reasonable confidence in our trading right now. If trade shows us that more than faster profits are possible, we have the resolve to: Exit 1/2 the position at or near first area of resistance and raise stop on the rest or hold full position and trail the stop to breakeven while holding through that first resistance level. <assuming it breaks it>
When trader begins to utilize this strategy, he/she will fall into the following trap. Trader enters the trade, sees it move to a certain resistance level then fall to stop them out. Thus, the trade went from profit to loss. What happens? Trader becomes frustrated. How does the trader move back away from this frustration? For me, either I play same setup and look for same outcome, or if I really need to regain the confidence, I will take that small win again. Traders do not win by systems alone. Your mindset is what takes you to new levels. Training your personality, your mindset, your ability to create more profits for yourself is what will progress you to new levels of trading. Allowing yourself the chances to make more profit will be defined by which level you are at. The market does not give you money, nor take it from you. You decide when to make your profit and when to make your loss. Therefore, the conclusion is that trading resides in you, in your personality, in your mindset. Realize this and you realize that you have control again as to where you want to exit that trade. |
