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Linda,
You are doing the right thing by jumping out a trade the second it turns against you. That is one of the maxims of profitable trading; "Cut Your Losses Short". A good trade should go your way the instant you enter it. If it doesn't, then there is something wrong with your analysis of the trade. If this happens too often, then you must be doing something wrong, analize your methodology and try to improve on it. In this day and age of $5 - $10 comissions and lightning fast executions, there is absolutely no reason whatsoever for a daytrader watching the market on a tick by tick basis to let a position go against him/her more than 1/16 or 1/8 at most. You can always re-enter at a more favorable price if you still think it is a good trade. If it turns around and runs the instant you get out , so what, you can enter it again at or slightly above your original price. A couple of hundred bucks of lost profits is much better than a couple of grand of losses. The day I started to take !
those mini losses was the day I turned profitable and consistent, believe me.
Now, as for grabbing a profit as soon as you have it, unfortunately I have that problem too. That is a gross violation of the other maxim "Let Your Profits Run". In most cases when I'm in a trade, I have a pretty good idea WHERE the stock's gonna go and WHEN it is gonna go there, and more often than not, it does prove to be very accurate, nevertheless, I'm out the instant I see any kind of weakness or hesitation no matter how minor it is! It is very heartbreaking when you go over your trades at the end of the day and see that you bought a stock say at 20, then out at 20 1/4, then you bought the SAME stock at 22 and out at 22 1/8, etc. etc.
Well, it is all a mental game, and I'm working on it with all my might! I guess we both are HALF way there :-)
Happy trading,
Levent
-----Original Message-----
From: Linda Swope [SMTP:linda@xxxxxxxxxxxxxx]
Sent: Sunday, October 04, 1998 7:09 PM
To: RealTraders Discussion Group
Subject: Re: Day Trading NYSE
Jeff & Victor,
I day trade mostly Nasdaq stocks, tho some NYSE... just got in the NASD groove a while back. I spent a year trading wildly. I started in the summer of '97 when you could hardly make a bad trade. Everything went up sooner or later & that taught me to hold my losers and soon they were winners. That was a BAD LESSON TO LEARN! I made a lot of money, but eventually the market turned and many stocks never recovered from downturns and I was still holding. A year later most of my money was gone and my ego and confidence were shot. I've spent the last month learning to get flat at the end of the day and I can finally do it. But here's my problem: I'm so terrified of even a $50 loss that I will jump out of a trade the second it turns against me. Markets need room to negotiate and I can't seem to give it room before I bail out. Jeff, you said you hope for a 1 point run, but I can't seem to stay in more than a 1/4 point before I grab my profit and run! I use a 3 minute chart w!
ith a 3 period MA crossing a 24 period MA as my signal. Any wisdom regarding this? Thanks!!!
Best wishes, Linda
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