Let your Profits Run

May 9, 2008 by day_trader

Today was a good day; I put on 3 trades with 2 winners and 1 loss. A few good things about today; the most important was that I took my loss fast and prevented a small loss from getting large. My two winners were sizeable; however, we could have had more. I want to be clear, there is a clear distinction between greed and letting your profits run. I have a system to keep me in trending winners and I need to let it stop me out rather than using my instinct to do that. Instinct is not a bad thing but there is a saying that is very appropriate here, "If it aint broke, don't fix it". I need to let my system take me out of my trades. Lets go over a few of them:

I will give myself a 6 out of 10 on this trade. I made almost 7% on this trade but the gain could have been nearly double if I had followed my money management rules. On another note, this setup is a dynamite setup and we will discuss it in detail in our upcoming trading course that we are going to offer to the public. Use the contact form at the bottom of this page to email us with your interest in our day trading course and we will keep you informed on when it becomes available.

ENER was another great setup but again, I didn't follow my rules and got out too early. Even though I made over 2% on the trade, it could have been triple that. The setup was buying breakout above the first 30 minutes high. Volume came in and I went long at 45. It was an interesting trade, I was nearly stopped out and they missed me by 2 cents. Sometimes, when you buy a breakout to new highs, the market will reverse and put in a 3 bar reversal to shake out the weak longs. They almost got me.

As you can see, using my ema, I would not have gotten stopped out until above 48. Now, the stock had run up to 50 which is half century number and a huge resistance point. I would have most likely sold it out near there with a failure.