My problem is that I never take a fucking profit. Plenty of winning trades, but no profits. The problem is momentum psychology — when I am in a trade, I get swept into believing in it. Funny that, only a few hours before, I was full of trepidation when putting it on.

I looked at copper as it rebounded from 3.00, saw the spike in volume, and thought “this could be a selling climax”. That’s what it was. So why didn’t I do anything about it? I have got to stop sitting in the market and just hoping. I have got to start locking in gains. Sometimes that will mean I give up some upside, but that is not the important thing. The important thing is to take some damn profit. I haven’t done badly so far in trading. After heavy losses in my first month, my equity has twice been up to my starting point. Last month, when I took a loss of 0.34%, I could have taken a profit of 0.5%, having traded my way back from a loss of 0.66%. But I don’t take the profits when they are on offer. 

Chanelling my inner geek, I am reminded of this bit of dialogue:

Aragorn: Are you frightened?

Frodo: Yes.

Aragorn: Not nearly frightened enough.

When I am in a trade, and it is running in my direction, I am not nearly frightened enough.

I am going to start putting profit targets with my orders so that they will be executed automatically. I am not sure what the target should be — one risk unit or two. I think that I will start with two — that will have a psychological effect, encouraging me to take profits if the market is almost at the profit target but shows signs of slowing down, so the target will effectively be profit <= 2 units. I will be allowed to take off the profit targets if the market is really running, but when I do so I will have to lock in a profit of one risk unit. Doing it this way means that I will have to make an active decision to let a trade run.

Update: You can hear that snippet of dialogue at the end of the LOTR Teaser Trailer.