Hi RTs,
I hope this will generate some
relevant discussion on the pros and cons of scaling out of a trade as
opposed to closing a position completely on reaching a target. So to
those who have any inclination to share their reasons/experience with
one or the other...
1) Do you take profits (or tighten
your stop) at one or more targets on part of your position, and let the
remainder ride, or
2) Do you prefer to be completely
flat at some pre-determined target?
3) Does it depend on the timeframe
you yourself trade, e.g., do you do it one way when daytrading and
another way when taking a swing trade lasting days or weeks?
4) Does it also depend on your entry
method/system, e.g., whether you you use one setup/trigger or another,
or perhaps whether you scaled into a trade?
I've read/heard a couple of well
known author/traders argue for one way or the other, and they
disagree on whether profitability is enhanced by one way or the
other. I also realize that it can be more stressful for some traders to
be in a profitable trade than to hold a losing position, so it may be a
matter of relieving some stress to take partial profits as a trade goes
their way. Also, one may change one's mind on which exit strategy to
use, as one progresses/succeeds as a trader.
So, if anyone would care to take the
time to explain their reasons for their preference(s), I think it
would make for a decent give and take.
Regards,
DC