letting your losers run and limiting winners

kmiklas said:
Jesse Livermore in "Reminiscenses of a Stock Operator" recommended dumping the losers and let winners run.
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yeah but he wasn't talking about ICs. An IC is a range play and eventually the stock will move out of any range. So taking the wins when the stock starts to move might be a good idea then reestablishing a new range play.
 
Instead of letting losers run, it is better to keep deep stops and large portions of positions will turn back into favor. This also gives you more time to analyse and study the market action further and take better decisions, even if it is intraday position.

It is always good to let the winners run.
 
yea, cutting winners and keeping losers goes against everything i remember reading when i was a kid. and stuff was more legit back then.
 
kevagonia said:
Guys, I know this has been addressed here in some form and I see it addressed online with regard to day trading, etc.

I'd like to know the opinion of anyone willing to share: context: risk defined small portfolio.

I have a portfolio that is currently limited to small positions that are 1-5% of account size and all defined-risk positions, iron condors and vertical spreads.

I have been instructed to cut all my winners at 50% (iron condors) and so forth and leave my losers alone and let them run their course.

I get the losers, but why not nurse my winners into a higher POP%? I can check my portfolio daily and allow winners to run a bit longer and net some more profit which will make the losers easier to cope with. If something is dead-center at expiration, why not net 100% of the credit I worked to get?

-K
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Hello kevagonia,

I definitely focus more on letting my winners run much as possible. I focus on trade management more then anything.

My main focus when manually day trading is to make sure when I exit a trade, price starts going the other way. I don't like exiting and price keeps going in my original trade direction.

So yes, for me, I like to keep big profit and less losses. The way I see it, I would perfer every trade to be a +100% ROI if possible. But this is what makes sense to me. Someone who scalps for a few ticks or so, may make alot money this way and comfortable this way.
 
schweiz said:
You can go broke by taking a profit. It all depends of the stats of your tradingsystem.
If you have 40% winners, 60% losers, average profit 200$ and average loss 100$, you make money following your system rules.
If you decide not to follow the rules and to take profits each time you make 100$, your total result will be a loss. So taking profits can get you broke.
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you are correct with this statement. Just blindly take a profit because there is one there, have cost me in the past.
 
One day a fellow named Elmer Harwood rushed into the office, wrote out an order and gave it to the clerk. Then he rushed over to where Mr. Partridge was listening politely to John Fanning's story of the time he overheard Keen give an order to one of his brokers and all that John made was a measly three points on a hundred shares and of course the stock had to go up twenty-four points in three days right after John sold out. It was at least the fourth time that John had told him that tale of woe, but old Turkey was smiling as sympathetically as if it was the first time he heard it.
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Why, this is a bull market!
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-- Lefevre, Edvin. 1923. "Reminiscences of a Stock Operator." George H. Doran & Company. Pg 66-7.
 
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