The following is some great reader Q&A regarding a quite difficult part of the trade management process:
I have been trading for a long long time and always have had one obstacle I can’t seem to overcome.
I feel I can pick the Perfect or Near Perfect Trade setups.
I feel I can allow it to confirm to “take” the trade.
I always have “Money Management” stops in place.
I feel I can raise my stop to breakeven when I’m ahead enough.
Now comes the problem. I don’t know WHEN to take the profit and run.
Over the years I have tried all sorts of guidelines.
- 50% retracement;
- 100% retracement;
- 50% out at 1st target with 50% at breakeven;
- Middle bollinger bands
- Middle Linear regression
- Opposite Bollinger Bands
- Opposite Linear regression
- gut feeling
- Money management: gain of 1x; 2x risk
- etc etc etc.
All of these are OK, IF I can pass the “in-between” area of uncertainty.
If I can get far enough ahead, I just follow up the stops to just below the previous pivot.
But it’s the “in-between” that haunts me.
Do I take the profit or put in a close breakeven stop.
If I choose either, sometimes the choice is great or terrible.
One time in the early 80’s, I put $750US into #2WSugar and in three weeks it was at $28,000US.
Didn’t know what to do.
Finally got out with $18,000US, which was great but it killed me to lose that $10,000 extra profit.
OK, this is an exception, I was stupid, I should have taken the money and run.
But even on the smallest trade I still have the same problem.
When to take the profit!
So after 45 years trading I’m still open to ideas and opinions.
Even now, I try to “listen” to many opinions about trading; some I reject immediately, some I ponder, some like yours I most appreciate.
I especially liked your thought conveyance that there is no Holy Grail, it takes hard work and experience to trade.
You make sense and deal in the “real world”; many many others don’t, they have gimmicks that work only for a moment then fail.
I have seen it over and over again. Your approach is most refreshing and “real”. Thanks!
So my long winded question is: When and How do you trade in the area “in-between” ? (In-between Profit and the breakeven point!)