You’ve probably heard this line before about letting winners run, but without following this one step its very difficult to succeed in trading.  We have to let our trades run as far as possible to catch that nice move that will make up for small losses as long as the overall market health/direction is moving in the direction of your position.

When I started out in trading, I created a very bad habit. Any time I got a small win I would close the position and celebrate. Only then to find out that the stock would continue in the direction I was in. My celebration would quickly turn into depression and various name calling to myself. Afterwards, my next trade would end up being a small loss and wipe away any profit I had made. That horrendous cycle would repeat itself until one day I realized that in order to be successful, I must allow my winners to run.

Nobody likes watching your stock pullback to your entry after being up small and your sitting there thinking what if this keeps pulling back and stops me out! Well… let it stop you out. Better to get stopped out with a small loss then to keep taking small profits and get nowhere in trading. Sometimes, you just have to sit through the pull backs (as long as your stock is trending in the direction you took a position in) and ride it.

So if your taking small profits every time, stop doing that and force yourself to ride it until something changes in that trade. Let the stock break a trend line or a break below a key moving average or anything else that makes you think the trade has changed. Remove your P&L off your screen and focus on your process.

If you found this post educational, then join me and my members and trade with us. Entries and trade management shown to ride our winners as long as possible. Click on the register link above!

If you found this useful, then join me and my members and trade with us. Entries w/ stops and trade management to ride our winners. Visit AmyAtrade.com to register!