Quote:
Originally Posted by pan
hi dave and Devadas
ive recently been actively trading and i have to say you are right on the money [pardon the pun]. in fear of being wrong i too have exited trades with a small profit.
ive got a 'choice' one going against me at the moment 'mvl' with a move against me by $2. its interesting because whatever ive learnt about the emotions of trading, in theory, is amplified many time when you are actually trading. ive been thinking of moving my stop with this stock. a definate 'no no' but the thought has crossed my mind, more than once.
the other thing ive thought about is if it moves in my favour, i'll close my position and come out even.
i'll certainly look at the modules that you pointed out dave.
these are my thoughts and id love to hear from anyone that can shed some light on the subject further.
if i am using historical price and technical analysis to get into a trade, some decision about when to get out of a trade needs to be made before a position is taken.
but at what time frame?
if i am day trading perhaps potential movements on a weekly chart are not going to be relevant to me.for example, if the ATR [on a daily chart] is 1 then it may be unusual to see the price move say 5points either way. im not saying it wont happen and thats why we manage our money using stops but to expect to take profit in the day when the price has moved in your favour from $10 to $15 may not happen. so id take the view that if im day trading then my potential profit is going to be $1 if the price moves from $10 to $11.
this to me is not taking your profits early. however, again i would say that i am new to this so if anyone would like to set me straight, please do.
'research your own experience, absorb what is useful,reject what is useless and add what is uniquely yours.' bruce lee
great site dave. loving daytrader rockstar.
best wishes pan
|
Hey Pan,
I like DayTraderRockstar too is fun to listen to and has a lot of good information.
As far as determining where to exit your position before you get in, a method that I like is to use similar analysis to what you used to enter the position.
So for example if I am daytrading then I would use multi timeframe analysis to get a feel for the long term, intermediate term, and short term trend of the market as well as any major and minor areas of support and resistance.
Then I am going to use my indicators to get a feel fore the momentum of the market.
An example of a trade I may take based on this analysis is when the market has been ranging and is at the bottom of the range with indicator divergence. So before entering the trade I know that if the market begins to approach the top of the range after I do enter the trade then that is probably going to be an exit point for me.
Other things that would make me get out of the trade would be if something that made me get into the trade changes. So for example if I am trading the range and the market does not bounce off of the bottom support in a timely manner as I was expecting then I will get out.
Anyways that is just one example but I think the point here is that because psychology tears at you so much once you are in a trade you need to have a full plan before entering and then if you change that plan then it needs to be based on your broad plan of how you trade (ie something with the indicators change as an example) and not off feeling.
Hope that helps.
Best,
Dave