The myth of letting your winners run

[Tradex]

All trades winners today.

That means the next round of Stella Artois is on you.

 

[SimpleMeLike]

Of course, and we can also use regression lines.

But I like to keep things VERY simple, that's why I use pure price action and nothing else.
Buy (or sell short) and let your winners run until you see some evidence that the party is over.

That's it.

Tradex, My style as well.

 

[volpri]

Just decided it was just plain and simple too hot for gardening so will rest and later today go back out there. So I might trade a little. I don't like averaging down in the last hour. So we will see. May just take a few straight scalps. So far all my trades been on the long side today.

 

[volpri]

That means the next round of Stella Artois is on you.

one of my favorite beers

 

[SimpleMeLike]

After years of trading I discovered that this is still one the best ways to exit a winning position!

The added advantage is that the trader can still re-enter the position if the trend resumes.

Excellent comments man, you really did your homework!

Thanks Tradex,

I trade 5 minute charts only. Over the past one years, exiting has been and still is a challenege.

When to exit?

1. If profit target (say Risk = reward, or some local resistance created by price). You take the money, You smile and jump. If price blast through that resistance or your profit target, the mind will start not liking you and asking. "Why didn't stay in? Look at all the money you missing. Damiitt, let your winners run..keep your risk smaller than reward....blah blah blahhhh, Ugghhh, now we have to get back in the trend, but what if its a loser and wipe away all those profits,...ugghhhh crap, guess I better get back in. "


The answer: Use an EMA between 1 to 10 to exit. Now I have a logical price behavior way of exiting positions, if price get below that EMA ...."ok mind, you see the bears getting weak, that is why exit...now leave me alone" LOL

 

[volpri]

Another NQ straight scalp. Yep again cut them profits short. Grab them pennies. Now at 900 b4 comm on NQ. A straight long scalp. Anybody want a beer?

 

[deaddog]

In fact that's how legendary trader Nicolas Darvas made 2 million dollars, by buying stocks making new highs (what he called the "box"), as explained in his fantastic book "How I Made $2,000,000 in the Stock Market."

I've read everything he has written. Part of my strategy is based on his experiences.

 

[comagnum]

Most of the more seasoned swing traders do both - ring the register at a smaller target, leaving half or a third of the position to run - why not, its a free ride?

These runners, when manged well, will add significant profit to your bottom line.

I always exit just prior to earnings and reenter the day post earnings if has not tanked.

 

[Tradex]

Most of the more seasoned swing traders do both - ring the register at a smaller target, leaving half or a third of the position to run - why not, its a free ride?

But again, how do we know if scaling in and out of positions is the optimal move (money wise), versus going "all in" right from the start?

See the problem here?

 

[deaddog]

I will scale in and exit the full position.