In looking at a common trait amongst developing traders a fault came to light.Beyond simple random impulse trading is trading where some of the variables controlled by the trader have been left unconsidered and to emotional or arbitrary factors.
Example: A trader enters a position and not only takes a quick profit on a partial position but then exits the entire position far short of his initial target. He essentially could no longer stand the idea of staying in the position and wanted to relieve himself of the potential stress that he would feel if the market moved against him. Then he watches the market run further in his former position's favor to where his original target had been or further.
Example: A stop loss is placed at an arbitrary loss, not based on support resistance, trade failure, his pre determined loss tolerance but rather only on comfort. These stops are routinely hit and the market reverses immediately. Example: A correct position was anticipated and the position was exited as soon as any real gain was made regardless of further profit potential. Example: A set stop loss exists for a trader in spite of any market variables such as volatility and the type of day or trading activity that exists in the current time period. Having a tight stop loss after entry on a sideways market could illustrate the gambling aspect of this.
When facing this sort of random exiting of positions a trader should determine his exits prior to the trade in the same manner he has developed entries so as to maximize his profits. He should determine what he should do to allow his winners to run as far as possible.
He should work out stops based on his risk tolerance but also on factors in the market which provide signals separate from his entry. (which the market itself is almost completely oblivious to)
He should even work to optimize any partial profit he takes and determine if there are circumstances which he would not take such and start basing his exits as well as his entries on a well considered reason.
After all, unlike nature he doesn't have an almost limitless amount of time to evolve. So without attempting to make trades something they aren't he needs to strive to make them all they can be to grow his account and profits.
