|
PureBytes Links
Trading Reference Links
|
John,
I try to follow my mental stops and always close a long position
that closes below my mental stop. However, there are a few times when
it makes sense to wait. I thought this was one of those times since
DELL, SMOD, and WLA closed so far below my mental stop yesterday that
at least a dead cat bounce was warranted. So I crossed my fingers and
waited today out. We did get the bounce and a good move in all three
stocks. Now the question is was it just a dead cat bounce or has the
market turned back up. Of course, the answer is that I don't know.
However, my system is still saying go short and my stops were
violated, so I'm going to close those positions in the morning. I
don't know if I was smart or dumb to wait a day, but I was sure lucky
<G>.
Jim
-----Original Message-----
From: John Manasco <manasco@xxxxxxxxxxxx>
To: Metastock List <metastock@xxxxxxxxxxxxx>
Date: Tuesday, September 01, 1998 9:07 AM
Subject: Exit strategies
>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
|