I have this problem with my TP.
Stop losses, I can live with them just fine now. I used to have this problem which I think most people have had, where you set a stop loss and if the price gets close to it you move it above/below the next support/resistance/trendline hoping the trade will work out. But of course mostly it doesn't so you move it again.... or take a bigger loss, or find you can't sleep at night....
Somehow I have taught myself not do that. And reading around that seems to be one of the hardest problems to fix.
The problem I have is going the other way.
I currently have a strategy which is giving me a lot more wins than losses, for example I placed 8 trades this last week, 7 wins and 1 loss.
The previous week I placed 10 trades, 8 wins and 2 losses. Similar results the week before.....
Every trade looks exactly the same, based on S&R and trends combined with fibonacci retracements. I'm working out the trend direction on daily and weekly charts (sometime 4hr too) and entering trades on H1/30M chart.
When i get a setup I take it, in fact I am already placing market orders in advance when I see a possible setup occurring so almost all of my trades open automatically. Therefore entering the trade is never a should I/shouldn't I quandry for me - another problem I used to have that I fixed. Most of my trades are lasting about 2-4 hours, occasionally I have one open overnight and generally giving about 15-25 pips profit or loss.
But I just can't help myself closing winning trades early if they seem to run out momentum, or hit some resistance level and bounce back a bit several times.
At the end of each week, I go back through all my trades both the winners and losers and analyse each one to see how I can improve my performance.
One of the main things I am looking at right now is what would have happened if I just left the trade alone to run to it's conclusion.
This week I still have 7 wins, 1 loss and a lot more money.
The previous week i would have had 7 wins, 3 losses (so one more loss) but still have made more money.
I did a similar exercise for the last few weeks. Each weekend I prove to myself I should just leave the trades alone. You would think that enough to convince myself what I need to do!. So the next week I start with good intentions on the Monday but they all seem to go out the window at some point in the week.
Having tried to work out why that is, it seems to be because I also set myself a target that I want to make a 2% profit each week which on my account means 100 euros a day. This is because I want to compound this account over three years, not draw earnings from it, and running some spreadsheets tell me 8% per month would be great return if I can achieve it.
So if a trade is winning and hits some sort of resistance I seem to think 'well that is a quarter, half, three quarters, whatever of my daily quota' and I take it when I know damn well I should leave it alone..... but I just can't. I tried switching the computer off.. But it drives me nuts until I just have to go and look.
At the moment I'm trading 0.5% risk per trade with a fixed stop loss and only have one or two positions open at a time. At the very most I may have three concurrent positions, all on different currency pairs but that's an exception rather than a rule. I never have two position on the same pair.
I know this is a psychological problem and we are all different, therefore the answer to the problem is different for different people... but sometimes it is hard to fix your own psyche so I would appreciate any advice on how I can do it?
One thing did occur to me, that if I started to trade with 1% risk on the same strategy then I should get to my hypothetical daily quota of profit more easily just by placing the amount of trades I am currently doing and maybe I would be more likely to leave trades to their conclusion.
Is 1% risk per trade considered very bad practice? I always thought so, but I see many members here advocating and taking much higher risks.
If I had been trading 1% risk per trade over the last few weeks I would be hitting my 2% already even when closing trades early. At the moment at 0.5% I am not getting there (but I would be if I would just stop messing with my own TP and found time for another couple of trades each week!)
Thanks for reading my rambling thoughts on this matter. Any suggestions on the problem and my proposed solution or other solutions?
Rich
Stop losses, I can live with them just fine now. I used to have this problem which I think most people have had, where you set a stop loss and if the price gets close to it you move it above/below the next support/resistance/trendline hoping the trade will work out. But of course mostly it doesn't so you move it again.... or take a bigger loss, or find you can't sleep at night....
Somehow I have taught myself not do that. And reading around that seems to be one of the hardest problems to fix.
The problem I have is going the other way.
I currently have a strategy which is giving me a lot more wins than losses, for example I placed 8 trades this last week, 7 wins and 1 loss.
The previous week I placed 10 trades, 8 wins and 2 losses. Similar results the week before.....
Every trade looks exactly the same, based on S&R and trends combined with fibonacci retracements. I'm working out the trend direction on daily and weekly charts (sometime 4hr too) and entering trades on H1/30M chart.
When i get a setup I take it, in fact I am already placing market orders in advance when I see a possible setup occurring so almost all of my trades open automatically. Therefore entering the trade is never a should I/shouldn't I quandry for me - another problem I used to have that I fixed. Most of my trades are lasting about 2-4 hours, occasionally I have one open overnight and generally giving about 15-25 pips profit or loss.
But I just can't help myself closing winning trades early if they seem to run out momentum, or hit some resistance level and bounce back a bit several times.
At the end of each week, I go back through all my trades both the winners and losers and analyse each one to see how I can improve my performance.
One of the main things I am looking at right now is what would have happened if I just left the trade alone to run to it's conclusion.
This week I still have 7 wins, 1 loss and a lot more money.
The previous week i would have had 7 wins, 3 losses (so one more loss) but still have made more money.
I did a similar exercise for the last few weeks. Each weekend I prove to myself I should just leave the trades alone. You would think that enough to convince myself what I need to do!. So the next week I start with good intentions on the Monday but they all seem to go out the window at some point in the week.
Having tried to work out why that is, it seems to be because I also set myself a target that I want to make a 2% profit each week which on my account means 100 euros a day. This is because I want to compound this account over three years, not draw earnings from it, and running some spreadsheets tell me 8% per month would be great return if I can achieve it.
So if a trade is winning and hits some sort of resistance I seem to think 'well that is a quarter, half, three quarters, whatever of my daily quota' and I take it when I know damn well I should leave it alone..... but I just can't. I tried switching the computer off.. But it drives me nuts until I just have to go and look.
At the moment I'm trading 0.5% risk per trade with a fixed stop loss and only have one or two positions open at a time. At the very most I may have three concurrent positions, all on different currency pairs but that's an exception rather than a rule. I never have two position on the same pair.
I know this is a psychological problem and we are all different, therefore the answer to the problem is different for different people... but sometimes it is hard to fix your own psyche so I would appreciate any advice on how I can do it?
One thing did occur to me, that if I started to trade with 1% risk on the same strategy then I should get to my hypothetical daily quota of profit more easily just by placing the amount of trades I am currently doing and maybe I would be more likely to leave trades to their conclusion.
Is 1% risk per trade considered very bad practice? I always thought so, but I see many members here advocating and taking much higher risks.
If I had been trading 1% risk per trade over the last few weeks I would be hitting my 2% already even when closing trades early. At the moment at 0.5% I am not getting there (but I would be if I would just stop messing with my own TP and found time for another couple of trades each week!)
Thanks for reading my rambling thoughts on this matter. Any suggestions on the problem and my proposed solution or other solutions?
Rich