Traders' Roundtable

I have been wondering how other traders handle missing an opportunity that turns out to be highly profitable. Just recently, this happened to me. I took a position in a stock, pyramided my way up, had a small profit, and then watched as I was quickly stopped out. I re-entered again later, only to have the same thing happen. When a third opportunity presented itself in the stock, I hesitated, became fearful of losing again, and never took a position. Two days later, I watched as the stock doubled in price. Now that's all I can think about, the missed opportunity and the feeling that I "shoulda, coulda, woulda". This is not the first time this has happened to me. Any suggestions on handling these situations?

are you a discretionary or a system trader?

My personal approach would be to check my rules. If my rules meant that I should have been in then I would kick myself hard. I would do some exercises to replace any faulty beliefs that might have driven the mistake and to ensure that I deeply understood that I shouldn't fail that way again. If my rules didn't I would congratulate myself on following my rules and consider an offline review (over a long range of data) to see if my rules needed improving.

Whichever; I find exercise, meditation, and kinesiology (energy tapping) to be good ways of dealing with any residual unhelpful emotions.

John

Conversely, if the signal was not part of a proven system, I'd let it slide, unless this was happening all the time. I'd let it slide under the belief that changing my otherwise profitable method to capture this one move might render my method less profitable all in all through its many other trades. But if this was a phenomena occuring most of the time, I'd say something's amiss with my method and work on improving that aspect: smaller positions with wider stops, more practical, market-oriented stop levels perhaps.

Thanks to those that have replied so far. Because I am still new to trading, every piece of advice helps.

All though my system is simple, it has done well for me. After reading the responses I think the areas that I need to improve on are (1) not over-riding the system with discretionary ideas(not retaking a position from fear of losing even when my sytem says to re-enter), (2) widening my stops, and (3) my re-entries.

If you did not adequately backtest your system, then you will not have true confidence in it; otherwise, you would not second-guess it.

If you did do all the historical testing, then you might have some other issue that is making you override your system.

Grand Cayman wrote:I think the areas that I need to improve on are (1) not over-riding the system with discretionary ideas(not retaking a position from fear of losing even when my sytem says to re-enter), (2) widening my stops, and (3) my re-entries.

When you say "fear of losing", that is a huge statement. If you examine that specific instance of fear, it might help you to solve some or all of your problems with system overiding and second-guessing.

Edward