I'm notoriously impatient and book small profits early. Any tips for letting winners run, especially for swing trading?
Example I bought PENN MGM off march lows but sold way tf too early.
I'm asking because if for example markets sell off and I swing trade inverses SQQQ UVXY SDOW SPXS SOXS LABD I don't want to get shaken out too soon.
While we can’t predict the future, we notice that a instrument will have brief trends, sustained trends, maintain a trading range, or reverse.
Two concepts to consider are variable exposure based on statistical validation, or at least based on sound reasoning, and hedging market risk when trading equities, a component of overall risk.
Variable exposure means taking partial profits at support or resistance areas, reducing exposure should the instrument move against the session open either by a threshold period of time and or amount, and increasing exposure after “Healthy” corrections or favorable price action after the open.
As a side note, Consider the long term relative performance of the instrument sans scheduled events when looking at the history of sustained advances. By the way, with stocks, sustained moves are based on long term fundamentals, not necessarily a earnings report. Think like a major institution who can’t simply enter a full position at a click of a mouse or situations that require “Forced” institutional trading such as index component changes, “Window dressing”, or events related to IPOs, among other things.
Partially or fully hedging market risk considers that you have confidence the stock you are trading will outperform the market. This may make it easier to hold on to a winner if the gains are more steady. It may be justifiable to increase position size with this sort of hedging.
