In day trading, our nature dictates that we are more likely to let our losers run, in order to avoid taking a loss, and cut our profits short in order to avoid losing the small gain we have. Today we talk to sophisticated investor and day trader Lyss Roberts for a few tips to help you let your winners run:
- Set clear profit goals: Determine the level at which you want to take profits and stick to it. This will help you avoid the temptation to sell too early.
- Walk away from the screen and have a short break, I would get some fresh air, go in the balcony, have some tea, walk around and stretch the body. it will allow you to step away from the constant stream of market activity and give your minds and bodies a rest.However, it’s important to note that taking breaks does not necessarily mean completely disconnecting from the markets. Day traders should have a plan in place for managing and monitoring any open positions, even when they are away from the screens. This may include setting stop-loss orders or using other risk management techniques to protect against significant losses.
- Do a 50 50 split and close half of that winning position. When you start seeing profits, excitements and emotions will kick in, what I usually do is take a portion off the table and realise 20%-50% of the profits. After locking in a portion of the profits will give us a boost of confidence and you won’t be as emotional as you would be by holding full position.
- Use stop-loss orders: These orders automatically sell your position if it reaches a certain level of loss. This can help protect against significant losses and give you the confidence to let your winners run.
- Use trailing stop orders: These orders allow you to set a stop-loss order that adjusts as the price moves in your favor. For example, if you set a trailing stop of 10% and the price moves up 20%, the stop-loss order will follow the price, protecting 10% of the profit.
- Keep an eye on the overall trend: I usually have the daily chart up as well as shorter time frames to keep an eye on the big picture trends.
- Manage your risk: It’s important to have a plan in place for managing your risk. This may include setting strict risk-to-reward ratios or using position sizing to control the amount of capital you have at risk.
Remember, the key to letting your winners run is discipline and the ability to control your emotions. It’s important to have a plan in place and stick to it, even when things get volatile.
Official site: https://www.lyssroberts.com/