What a Wild Ride!

Thanks for your posts. I have found them really interesting. I also think eLROY's responses have been great, and I have learned from them. I can assure you that I have made every mistake you have made in trading the eminis, and more. It is not easy to stop making the mistakes even once you have made them. (That said I am still trading and still making a living, so I guess it is not impossible.)


I think that holding on to your mistakes is the worst thing you can do in the emini game. The problem is that frequently you can get away with holding on to your mistakes, as you discovered yesterday. The chop in the market is so intense that sometimes you can luck out. More frequently, however, you do not "luck out".


I figured out a while ago that I tended to hold my losers longer than my winners. Not doing this takes a huge effort of the will. I have thought about this in relationship to some reading I have done in psychology, and come up with the following insight. Kahneman (sp?) and Tversky have noticed that people have asymmetric risk preferences when facing losses and gains....we are more risk loving when it comes to avoiding losses than we are than we are faced with prospective gains. In other words, it is human nature to rely on chance more to get us out of losing situations than we do when we are in winning situations. This is why it is hard to fight the tendency to let your losers run. I think this is particularly intense in the emini market because it is so volatile.


Thoughts?