A few days ago, I wrote that my notes show that if I'd just let my initial entry position run through to conclusion on all my trades this year, I would have 1200% more profit. So the last 2 days, I decided to try this new, ultra-aggressive approach on all my trades. Typically, I haven't won a match since! Down the years, I have seen many traders ask the question 'Have you worked out what you would have made if you hadn't traded out?'. Many suspect that you would probably end up with a similar amount to what you made by greening and redding up. My recent calculations suggest that it could be even more. But what the last 2 days have shown me is that I would much rather be a proper trader and close my positions, without question.
Firstly, we have to distinguish ourselves as traders - we are not gamblers for a reason. Whatever anyone says about trading and gambling being the same thing, whilst ostensibly, trading is still a form of gambling, in reality, the two require very different mindsets which are poles apart. I have never been a gambler and never showed any interest in it whatsoever. I don't enjoy it, don't get a rush or a buzz and would much rather have a nice, steady, boring income stream from trading, than get involved in the action.
"Amateurs look for challenges; professionals look for easy trades. Losers get high from the action; the pros look for the best odds."
Dr Alexander Elder from 'Come into my Trading Room'
If you are just letting your initial entry position run its course, that is nothing but a straight gamble. Yes, you may have taken value and yes, that trade may keep its value right to the end of the match but you have to take into account other factors. The one that bothered me the most was the stress factor. Having to sit through the ups and downs of a tennis match for 2-3 hours several times a day, is probably going to kill me! I couldn't bear to put my nervous system through that every day and I get no thrill at all from it. Then there is the time factor. If I close a trade after half an hour, whether red or green, I am now free to either move onto another game or to relax till the next match. This can only help keep you fresh for the rest of the day's trading. There is nothing worse than being stuck staring at a PC screen for hours at a time, so any chance I get to take a break, I want to grab it.
Then there is the psychological factor. Redding up for a small loss is fine in my book. I might be a tad pissed off if that trade reverses and goes on to win but I think long term these days and so I take satisfaction in knowing I did the right thing and protected my bank. Plus, I may have already moved onto another game and made profit by the time that big win came in. But there is nothing worse in trading, than when you see a big all-green screen slip away from your grasp. After 3 hours or more of watching a tennis match, can you imagine how demoralising it must be to see the £50 green you could have taken after half an hour, almost hit the end target of a £100 win and then slip back to a £25 red? Well I can because that's exactly what happened in the Sharapova v Lisicki match! I felt sick.
Now, traders (gamblers) who let all their positions ride will say that it doesn't matter about this because in the long run, your big wins will be far more than those losses. That may be true but you can't put a value on your own health! Sure, I could just go away and do something whilst the game runs its course but who in the hell is able to concentrate on another activity knowing what is at stake? I know I couldn't. There is nothing more satisfying than greening up before the end of a match, in my opinion. You might win more by waiting till the end of the game but the way I see it, by that time, you EXPECT to get the win for all the hours you've put in. Anything less is just a massive let-down, so that win doesn't even seem that exhilarating. So just for my own sanity, I've decided that I will be doing traditional trading from now on. Besides, I will be more than happy with just half of that 1200% profit increase!
OFF-COURT BEAUTY: World number 4, Maria Sharapova: