Taking profit regularly

Market is unpredictable.

It does not always move with fundamentals. It was John Maynard Keynes that said “The market can remain irrational longer than you are solvent”.

I have found that it is useful to take profit regularly although I maintain a fundamental bias for the trade whether it is bullish or bearish.

Yes, there are trades every year that I let the profit run and closed the trades with a few 100% gains. But this has been difficult. It must apply only a minority of positions where I have clear certainty and some luck. It also takes a much longer time. If I add up all the short term trades, I will probably achieve the same results.

So I have been taking profit more regularly. When a trade hits a >30% ROI, I should seriously consider closing the trade and start a new one.

Overall swing trading seems to be more profitable. I have known traders who trade more than 100 trades a year without losing a single trade. Besides the ability to gage the momentum accurately, the key is to keep the gains to a very modest level. Also, when there are losses, the focus is on how to get back to profitability or just cut loss and  get out.

There are few positions like gold and silver where I keep 30% as a core position which I will not let go unless fundamental begin to change. I trade the remainder.