Entries by Peter Brandt

It’s harder to manage a profitable trade than a losing trade

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 Profitable trades are the hardest trades to manage
 
Trades that are somewhere between break-even and an eventual price target are the hardest trades for me to manage.
 
I have no trouble exiting a trade that turns quickly into a loss or challenges my entry level a few days after I enter the trade. 
 
I also have no trouble taking profits at the target level I predetermine for a trade.
 
It is between these two extremes that managing a trade is difficult. There is an old trading adage:
 
"Cut losses short, let profits run"
 
Easy to say -- hard to do, especially the "let profits run" part of the adage. In practice letting profits run is one of the most challenging parts of trading. On one hand I  want to give a trade ample opportunity to trend toward a profit target. On the other hand I do not enjoy letting a profitable trade return to the starting gate ("Round trippers" is my name for these trades). Finding the balance is the issue.