How can you stop from cutting your winners too early?
We all suffer from that anxiety of holding onto a winning trade, we’re in profit, and things start getting a little volatile, then price starts heading the other way…but you’ll be damned if you let this profit go, so you jump out of the trade, only to see price turn around and hit your target, and just to rub your nose in it all, it keeps going…and you’re sitting there wondering how the hell did I let that happen again?
You are not alone, it happens to a lot of us, some more than others, some people it seems to happen all the time.
Well, here are some ideas that might help you stay in that winning trade.
The first thing you need to do is identify the type of market you’re in, is it trending or range bound? There’s no sense in trying to hold winners for those extra gains in a range bound market, just play the range…so these tips would apply to a trending market.
That’s the first realization, you can drop a significant amount of your anxiety simply by recognizing the type of market you’re in. And remember, you’ll be in that range bound or consolidating market far more often than a trending one (70% versus 30% when trending).
So, if you’re in a trending market and your position is in profit, set your risk stop and set alerts for your target and beyond, then just walk away…don’t let yourself become fixated on the charts. If your trade is destined to reach the target, it’s going to go, and no standing around is going to change that, so just walk away.
You can also try setting a timer, so that you check on the trade only when the timer goes off…but this may not work for you, it doesn’t work for me. You just end up staring at the damn timer. Setting alerts is a much better way. Have your trading platform send an email or a text message, or add a custom sound to it. Many platforms allow this, you can have some fun and record all kinds of alert sounds for different situations.
With PatternCast signals, those that trigger, the average move is almost 200% of the target. That’s a pretty compelling reason to hold onto a winning trade. Perhaps you need to go back and look at your trades where you’ve skipped out early, and start building a case for why it’s better to not be a hawk and step away from the charts and let your stops and alerts do the work for you.
Don’t get so invested in every trade. No good ever happens from hanging on a traded feeling attached to the need to keep profit. Either your strategy is good or it is not good. But you’ll never find out if you don’t let it work.
One last idea may work for you if you have fractional shares in a trade, in other words, several smaller positions that make up your total position. So, you could employ a strategy of scaling in and out of trades. That way you’re not committed fully to getting out. But I’ll warn you, this can be addicting and cause you to second guess unless you have a solid and reasoned strategy for executing how you scale in and out.
There you are, a few ways to help keep you in trades and not exit them prematurely.