Run your winners, cut out the losers – trading adage

The subject of this trading is a very well known trading adage and for those who trade, I’m sure you’ve seen it many times before. However, how many people can actually do this?

We are programmed to lose by nature with the stock market.. peoples’ emotions mean that they tend to hold onto their losers in the hope that they can recover any losses but the winning trades are those that we cut short once their in profit (simply as it feels nice to be in profit). In the short term, you will lose this way.

One thing I have noticed is that whilst I’m particulary good at cutting out my losers… I’m horrible and holding onto my winners. I keep on closing my winning trades early only to find that the market has moved my direction for a lot more potential profit.

My first trade this evening was not a bad entry. I got in at 134075 with an aim to ride the market to 134475. Momentum in the 5 min charts was strong and the stochastics were moving up nicely. The 15 mins had not moved up as yet but it was looking to turn. Anyway, thinking of running my profitable trades, I held the trade diligently.. it went up to 134325 and then tanked, taking out my stop for -5!! Grrr! My trading mentor actually called me at this stage and said that as soon as the market had penetrated the previous high and gone through it, I should have moved my stop under it…. this is a lesson here to be lodged into my memory (so I’ll underline it!)

My second trade, I shorted below an intraday neckline at 133550 with a target of 133275. The stochastics were in line in all timeframes. It hit target for +11 but then went further and went as low as 132750… this was a potential +29 price trade!! I was so determined not to take another loss that I had lost some profits!!

I ended up with +7 for the day…  not good enough really!

As I write, the market has bounced off 132650… another 4 prices!


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Category: Emini futures, Make Me Some Money Ideas, money, Trading