The challenges of trend following : Hope and Fear

Recently, I've been receiving inquiries as to why I still haven't taken profit yet. The answer is simple, my system hasn't signaled me that the trend has changed.

Like Jesse Livermore said when you hope you should fear when you fear you should hope. What does this mean? IF you look around stockbroking houses you'd see that the majority of the retail clients always take small profit for the simple reason that they 'FEAR' they'd lose their small profit and they hold on to losses for they 'HOPE' the market would go back their way. I should be hoping that my winnings would turn out to be bigger than now rather than cutting my profits short.

The danger of taking premature profits is to leave me FRUSTRATED should the trend continues further. Then my AGONY to ease the pain will force me to play catch up with the market which will be suicidal for me as it would be for any trader. Think about it, how many times have you taken premature profit and see the stock or instrument which you have been holding go even higher and higher. I have heard many testimonies from clients that they could have made a killing "IF" they just held on a little longer. So you see, even if I'm forced to reverse my position later and the profit is not as big as it is now, I would still be proud of myself for following my system as I know I could never predict the future or how much I'm going to make ; I'm just a trend follower. I have no emotional conflict now with myself whether I win or lose in a trade and I do sleep soundly not worrying about the future.

So my friends, I have "HOPE" that my profits would grow bigger and please do not "FEAR" I would lose it.

Maybe if time permits me and when I'm in correct frame of mind, I would try to explain trend following in more detailed. I do hope my bestest best friend Richie Lee of  http://cposystem.blogspot.com/ would contribute some of his thoughts and ideas on trading in this blog.