Leave It On The Table http://www.netpicks.com/leave-it-on-the-table/

If you enter the trading arena, it is only a matter of time before every

psychological issue related to trading will rear its ugly head. Make no

mistake that with few exceptions, the psychological aspects are what do

most traders in.

Sure, people go through life in the normal day to day routine and think they have it all together. Believe that trading will shake that up and make you challenge the high thoughts you

have of yourself.

One thing that dogged me in my early years (and still does at times) is the

entire "leaving money on the table".

That is simply where you take your profits at a certain level and the

market continues to go in the direction you were in. As you watch price move, you silently calculate how much your account would have grown if you only

let it ride!

Many trading methods/systems have a profit target. It could be a percentage

of ATR, a support/resistance level or as simple as a trendline break.

Once the level is hit, you exit and bank the profits. Out of the market means you no longer are at risk, right? Yes and no. Financially there is no risk.

Mentally is an entirely different story.

Watching the market pull away leaves you looking at your small but

consistent gain and calculating how much you left on the table. For many people, this causes them to rethink

how they are going to handle the exits in their trading.

Let's assume that the profit targets set in your system are not entirely

random. They are calculated through the moves of the markets and are

objective. It keeps you consistent. The risk is that due to you seeing how

much you are "leaving", you decide to alter your trading plan.

The next trading day, determined to grab the extended move, you trail a portion of your position. Worse, you decide to ignore the profit target and choose to trail the whole thing.What

happens? Murphy's Law.

This day does not have the same level of action as the day before. Price

rockets towards your objective profit target but instead of exiting, you trail.

The market reverses and takes you out. Worse, price did not go far

enough to trail so your original stop is hit.

What was a quick winner turns into a painful loser.

Back to the drawing board.

The following day you choose to exit at your target. Of course, this is a trend

day and the market exceeds your target and was a great one to trail. But

you didn't. See the problem?

Knee jerk reaction has caused you to lose one of the most important traits a trader can have: Consistency. Believe

that once one wheel comes off the wagon, the others are sure to follow.

Keep this mind. You will miss trades. Perhaps these moves fall outside of

your trading time frame or they don't suit your setup according to your plan.

These trades will rocket away and give those that are in the market a nice

win. You can't be in every move of the market. Accept that. Accept that you will not only miss huge runs but you will also exit trades that will go on

huge runs.

The fact is that taking your profit target consistently already puts you on

the side of the winning trader. Most lose and most don't follow any type of

trading plan.

Sticking to what is consistent and banking those targets when reached is following a plan. Following a plan will keep you out of the RISK of deviating

due to market events.

You are trading a winning plan. Be happy with that and make your goal all about compounding. Take your quick hits and allow your account to grow

consistently. Then, those profit target winners will become larger simply by

increasing position sizing.

Leaving money on the table will no longer be an issue because the money you take off the table, is substantial.