|
PureBytes Links
Trading Reference Links
|
After reading several posts recently by some new and old participants in
the list I would like to start a discussion of my favorite subject,
namely loosing money. It seems there is a lot of confusion about when to
get out of a stock or commodity. Most of that confusion is between my
ears.
First when you purchase a stock or commodity when do you pull out if the
position moves against you? Second, how much do you let your position
fall thinking that it's just a retracement a will continue the move?
Could someone explain how to use stops properly? Especially trailing
stops. Do I need em? I am getting mad watching my profits evaporate and
go into losses.
Last week I went flat in my portfolio. I sold all my stocks and kept all
my option straddles. Then I fretted all week that I had missed the
bottom and would miss the next up move. That's when I realized I have
too much emotion involved in my decisions. I have always said I don't
have a good exit strategy but I didn't realize just how much my emotions
were playing into it. Now I question my entry strategy too, and that's
pretty much mechanical. The subjective part is whether or not to
actually put the trade on.
Everyone tells me about fear and greed dominating trading decisions. I
also think I have listened too long about my time frame and goals. I
have been investing for ten years and trading for maybe five. Over that
time people have told me to invest for the long run, let my profits
ride, don't be swayed by short term blips, decide what time frame I want
to trade and all the other admonitions about trading. This has served to
confuse me more than help me as I made the transition from investor to
trader.
So I admit it, I sometimes lose money because of my exit strategies. A
lot more than I would like to admit. So what are some of your thoughts
on exiting a position. I really hope I get a lot of feedback on this
because this is really important to me, and it seems to a lot of other
people too.
John Manasco
|