Taking Gains


There are many ways to find success in trading.  Obviously being discipline and managing risk are essential to any strategy but doing these things can look VERY different between traders.  There are different time frames being traded, different risk levels people are comfortable with, etc.  I could go on and on.  To each their own.

Personally, I know the big money is made in following the longer-term trends.  I’d say I’m a trend trader at heart.  However, I struggle with this in practice.  It’s hard to keep holding a winning position!  It’s OK to admit.  It’s human nature to want to take that gain. So knowing the really big gains are made by holding (as long as the trend is up of course) and having a strong desire to take gains can put you in a tough spot emotionally when trading.

So what I do is I go ahead and take that swing gain if it’s there.  I scratch that itch.  I raise cash to deploy to faster moving opportunities while booking profits at the same time.  It feels good, builds confidence, and is good for the P&L.  However, I only take gains on part of the position (I typically split in half) if it still looks healthy.  It’s amazing how getting the gains out of the way frees up my mind and allows me to be more patient with the remaining shares.  It’s like a mental reset.  As long as the position is trending up (higher highs and lows, above a key MA, or however you want to define it) taking those gains on the partial position just makes it so much easier for me to keep my hands off and let it work.  Plus my position size is now much smaller which is also key.  Again, everyone’s personality and trading style is different, but for me splitting my positions has been very beneficial.  This is also the approach I take for alerted trades on TTP Trading.

I think I’ve heard a person or two (just kidding – more like a thousand!) on FinTwit over the years bring up the Livermore quote about how the big money is made in sitting.  It’s a great quote to keep in mind and I agree 100%.  I just have a hard time sitting down without burning a little energy first.


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