Five tips for holding winning trades

Letting a winning trade ride is difficult.

How many times have you had winners evaporate in front of your eyes, stop you out at break-even, or even worse, turn into a loser?

It is no surprise holding onto a winning trade is one of the most difficult skills for a trader to develop.

When you fully embrace the uncertainty of trading and accept the fact we are right in our ideas about half of the time (depending on your system), you become conditioned to appreciate profits and want to lock them in — FAST.

Sometimes taking profits fast is a good thing, check out our post: How Smaller Profit Targets Can Improve Your Trading, but other times it’s not. Knowing when there is “more” in a trade is an important skill to develop. Knowing how to sit and wait in a trade that has “more” is a second equally important skill to work on.

A very important adjustment I have made in managing my own winning trades is being very clear ahead of time whether the trade is for a scalp or an intraday swing.

When a trade is setting up for a scalp, that means I am not interested in sitting through pullbacks or sideways movement. I am looking for a single impulse leg in my direction with very little resistance. These targets are typically small, usually a single leg higher within a trend, or a trade from the edge of a trading range, back to the midpoint.

An intraday swing is when I have built a thesis around the direction of a stock for the entire trading day. For example this could be a reversal trade from the lows back to the highs of the day or a breakout from a range and trend to new highs. The first rule for holding onto your winners:

understand and accept ahead of time that you will be faced with uncomfortable price action before you achieve your profit target

Once I have my trade setup and entry I am now ready to let my trade thesis play itself out. I am accepting upfront that I will very likely have to sit through several pullbacks and sideways consolidations before I finally exit my position.

These are the difficult trades that require you to actively manage yourself. You will always be tempted to just take what profit you have in a position the moment price action becomes questionable. Keep the original trade idea in mind: do not touch those profits, and let the winning trade ride. 

Trade smaller size in order to hold winning trades longer

If you are risking a large percent of your account on any one individual idea then it will be nearly impossible to make objective decisions throughout an open trade. If one trade can make or break your week, month, or entire trading account then you have way too much size on. You want to reduce your position size enough so there is little to no emotional attachment to the dollar outcome.

Walk away to hold winning trades longer

Once you enter a trade, set your stop loss and profit target, and just walk away.

Whether you step away for just 5 minutes, or until the trade closes, just get away from the screens and clear your head.

Nothing can play tricks on your mind more then watching a position tick by tick as your PnL fluctuates in front of your eyes. The more you sit and stare the more tempted you are going to be to impulsively click buttons.

Do not let past performance effect current decision-making

Take for example a day that starts off red and you find yourself down $200.

The next trade you take begins working in your favor and suddenly you start thinking to yourself, Well I am up $200 right now in this trade, I am more than happy to just close this out now and be back to flat on the day. This is a very costly mistake that will add up over time.

If you’re constantly looking for trades and managing them based on how you are feeling, or what your recent PnL is, then you will miss out on lots of great opportunities and large chunks of profits. Every trade should be measured and analyzed based on its own unique setup and opportunity.

Stop looking for excuses to exit a trade

This was a big one for me. When I was in a winning trade the most insignificant signals would trigger this voice in the back of my head begging me to lock in profit on my green trade.

For instance, if the market makes a push to new highs and my stock printed a doji on a 1-minute chart instead of making new highs with the market.

Well who cares!?

You cannot agonize over each new tick of data that doesn’t move exactly in your favor. You need to be comfortable with normal market movement and allow healthy breathing room in your positions.

A long distance move requires a lot of cloudy price action and an unclear path to the end result; it’s just the way the markets work.

What are your tips for holding winning trades? Leave a comment below, I’d love to read them.

Enjoy what you read? Share it below and be sure to tag @thetraderisk.

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Evan Medeiros

Evan is the founder of the Trade Risk. With 25 years of coding experience and a B.S. in computer science, Evan brings a systematic discipline to investing in the stock market.

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  1. Pete on 7:22 pm September 20, 2023 at 7:22 pm

    Great article and advice, thanks for posting

    • Evan Medeiros on 7:45 am September 21, 2023 at 7:45 am

      Thanks Pete! Glad you enjoyed.

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