Most people are terrible at taking profits. It sounds weird, you would think taking profits would be easy, but as any experienced trader can attest to, it can be one of the most difficult parts of trading. The issue is that when most traders get up a decent amount of money they don't want to close it out because the market looks like it will keep going in their favor. What ends up happening however, is that if you don't close a trade out when it is in your favor, you will inevitably close it out when it comes crashing back against you, for what usually will be a much smaller profit, if any.
The way to remedy this is to view each trade setup as a risk to reward scenario. Typically a risk to reward ratio of 1:2 or greater is desirable, a risk to reward of 1:3 or 1:4 is excellent. Setting your target at a distance that will net you 2 or 3 or 4 times your risk will take the guess work out of profit taking and will make you much more likely to take a profit when the market is heavily in your favor rather than when it is moving against you.
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