Clarify Letting Profits Run

Cont'd discussion about website article entitled Replce Discipline

Here’s another example of applying the step called “Clarity”.

Another frequent occurring issue for traders is failing to let profits run. What you would like to happen is to let profits run.

Who: You.

What: Let a winning trade continue moving in a favorable direction, subject to your criteria for exiting the trade. Clarify your criteria for exiting the trade. For example, use a trailing stop based on a fixed amount of accrued profits that you will tolerate “losing” before you exit a winning trade. “See” yourself doing this.

When: Every time you have a winning trade, you will let it continue to move in a favorable direction until it moves by a fixed amount in the opposite direction.

Where: Place a trailing stop with your broker.

How: First, you recall the procedure for making the decision as to amount of the trailing stop. Second, you apply that procedure to your winning position. Third, you tap your computer keyboard to enter that number as an order to close out your open position if the market, while moving favorably, reverses direction by that amount.

Why: To let profits run.


...cont'd tomorrow...

Website Home has MOVED to:
http://LeisurelyCashFlow.Googlepages.com

Copyright 2008 Raymond T. Lee. All rights reserved.
LeisurelyCashFlow
eMail me Comments