Number one lesson learnt in trading

[wbosher]

I saw a similar thread on another forum and thought I'd try to get one started here, it could be very valuable for newbies if it gets any traction.

I've been trading for almost a year now but still consider myself a newbie with a LOT more to learn. My record for picking stocks isnt too bad for a newbie (about 50/50 winner vs losers) but my main problem is managing the trade once I'm in, specificly letting my losers run too long and ignoring my stop losses. I would be doing quite nicely if I could bring myself to cut them loose once it becomes apparent that they are not going to recover anytime soon. I think that lesson has been learned now, and hopefully it's all up from here.

Anyway, if anyone else would like to post their hard earned lessons learned, it would be very useful.

[Lego_Man]

I've made a couple of mistakes and a couple of good calls.

Letting the winners run is the key too...i keep trying to get tricky on CCU and sell it into the big spikes, yet it keeps going up. Cost me a fair bit in forgone profits in the last few weeks.

On the other hand, resisting the urge to hold NBS saved me a lot of coin.

[shasta]

I saw a similar thread on another forum and thought I'd try to get one started here, it could be very valuable for newbies if it gets any traction.

I've been trading for almost a year now but still consider myself a newbie with a LOT more to learn. My record for picking stocks isnt too bad for a newbie (about 50/50 winner vs losers) but my main problem is managing the trade once I'm in, specificly letting my losers run too long and ignoring my stop losses. I would be doing quite nicely if I could bring myself to cut them loose once it becomes apparent that they are not going to recover anytime soon. I think that lesson has been learned now, and hopefully it's all up from here.

Anyway, if anyone else would like to post their hard earned lessons learned, it would be very useful.

You need to remove the emotion from your trading.

Best way to achieve that is to write down some set criteria for yourself, & most of all stick with it!

Perhaps Phaedrus will be able to offer advice on stop losses/trailing stops for trading (setting them just below previous support etc)

Might be useful for you to go & back test your previous trades & see where stop loss/trailing stops should have been placed.

How are you managing winning trades?

Funnily enough this isn't as easy as it sounds, again perhaps Phaedrus can help you with the various indicators that would help you with a sell signal.

You don't want to give back to the market your hard fought gains!

I'm more a fundie than a trader, but using examples of candlesticks the GMI & MNL threads may be of help.

[wbosher]

I don't have too much trouble placing stop losses, I have issues closing out the position once this is hit. Fairly common among newbies, I hear. :o

Managing trades once I'm in is sometimes a bit hit and miss, not sure which indicators best suit the occasion.

At the moment I'm pretty much concentrating on breakouts from triangles, of which I've found quite a few lately. My plan is to wait for a close above the resistance on high volume, and set the stop below what is now hopefully support. My target is based on the width of the base of the triangle as per most books advise. From this point on it's a little hit and miss, if it falls below support I sell (or at least I should). If it goes up for a day or two and then goes down again, I'm having a little trouble to determining if it's just a breather or not. Not sure which indicators are best in this situation.

[miner]

Stops are easy once you take "ALL" emotion out of the decision,take the hit say bugger learn from it and move on.

Cheers
miner

[shasta]

I don't have too much trouble placing stop losses, I have issues closing out the position once this is hit. Fairly common among newbies, I hear. :o

Managing trades once I'm in is sometimes a bit hit and miss, not sure which indicators best suit the occasion.

At the moment I'm pretty much concentrating on breakouts from triangles, of which I've found quite a few lately. My plan is to wait for a close above the resistance on high volume, and set the stop below what is now hopefully support. My target is based on the width of the base of the triangle as per most books advise. From this point on it's a little hit and miss, if it falls below support I sell (or at least I should). If it goes up for a day or two and then goes down again, I'm having a little trouble to determining if it's just a breather or not. Not sure which indicators are best in this situation.

Hopefully someone from a TA perspective can answer those answers for you.

What you must remember when "trading" is that you are competing against the likes of Phaedrus, where a more experienced trader may try & shake out the weak hands, & trigger some intra-day stops.

Most traders will know stops usually sit just below support levels, so it really is musical chairs getting in & out of stocks by trading!

[RazorX]

I have found that not moving the stop loss when it is getting close was the hardest thing. Even though I'm still demo trading I get to the point where I'd get upset if I had lost a few trades in a row and so would keep moving the stop loss in the 'hope' that the trade will turn. Now as miner just said I try and take all emotion out of it. Because I am realizing I can't take big losses and emotionally move on I find it suits me better to set quite tight stop losses and not touch them once set. Typically with my new way I will set stop losses at the lesser of 140 odd pips or the previous support/resistance level. I then know before I set the trade how much I stand to lose and this helps. (Works out to around $8.50 on a .05 lot)

The bit I haven't quite quite got figured out is proper take profit places. I either set them too high and miss the target by 20 pips, or set them too low and miss out on 200 pips. All a learning curve though.