What's a good strategy for locking in gains?

[farmerjohn1324]

For example, if I sold the EUR/USD thinking that it will be significantly lower in 7 months...

Obviously, it won't go down in a straight line even if I'm correct. So what's the best strategy for periodically locking in gains and then re-entering the trade?

 

[OptionsOptionsOptions]

Close the position.

 

[Collagen]

Trailing stop?

 

[KCalhoun]

I use trailing stops and partial position exits vs trading entire size

 

[Akhaldanos]

For example, if I sold the EUR/USD thinking that it will be significantly lower in 7 months...

Obviously, it won't go down in a straight line even if I'm correct. So what's the best strategy for periodically locking in gains and then re-entering the trade?

Try this: on Daily TF - after EVERY 5 consecutive closes BELOW EMA10 close 1/5 of your position (you might see 10 in a row, so at the 10th you'll be 2/5ths off). If close above EMA10 - reset the count. At 5 consecutive closes ABOVE EMA10, if your original position is in PROFIT - double it; if not - do nothing. NEVER move your original stop loss. When your target is reached or your original analysis is no longer valid, or you perceive impending major reversal - exit all.

 

[longandshort]

1. Tie trades to catalysts
2. Have multiple, non-correlated, trades in your book to reduce portfolio covariance
3. Manage the size of the trade by conviction and expected return

Other than that, there are no magic formulas or approaches to lock in gains. So just make sure that your rationale behind it makes sense.

 

[Handle123]

Long term, once I get to breakeven stops, backtesting has proven to me trailing stops rob the position. I know patterns well enough to hedge open positions when they show possible reversals, like last year's sell off in February by selling ES futures, hedging those, to hedge my long Dividend stocks that were bought in 2009. Then you can exit hedge like in April, locking in funds from the decline or reverse/hedged for move back up.

Am firm believer that is you going to lock something in, time to get out.

 

[Sekiyo]

Mechanical rules won’t work well overtime.
You need to learn to read the market,
Else you’re wasting your time.

 

[tayte]

For example, if I sold the EUR/USD thinking that it will be significantly lower in 7 months...

Obviously, it won't go down in a straight line even if I'm correct. So what's the best strategy for periodically locking in gains and then re-entering the trade?

Put spreads, and roll the strikes lower each time you wanna lock in gains while still leaving room for further P&L upside.

 

[DevBru]

Mechanical rules won’t work well overtime.
You need to learn to read the market,
Else you’re wasting your time.

I think a lot of firms/traders that use algo's will disagree with you.