One of the harder trading techniques is how to manage trades when they are in deep profit. Many traders find themselves spotting great trade ideas, but take profit too soon. Why do we do this? It is because the emotional hit of seeing large profits disappear is too great to bear. So, often even experienced traders will take profit because the prospect of a large winning trade turning into a losing trade is too much.
So, how can you help yourself in this situation? Well here are three tips to help you:
- Are there reasons for your trade to still move in the expected direction? If there are still good reasons then why change your outlook?
- Can you trail the stop instead? Even if you keep trailing beneath daily highs and lows you can make the most of the move.
- Could you take half the position off and leave the other half to potentially run higher?
By pausing to ask these questions you can help be rational in your decision-making process. Trading is emotional, so being logical requires deliberate effort.