Do you take profits early, or hold out regardless of price action?

Beginner Questions
1

Background: I scalp and enter on the m30 and m15. I trade with the trend on break and retests of support and resistance levels on h4 and h1.

My trading plan:
To determine trend, I have the h4 and h1 30+ pips away from price for it to be a considered a trend in a direction. ( example: if price is below h4 and h1 by 30 pips, I’m looking for sells by h4 and h1 support and resistance levels, waiting for a break)

I shoot for about 10-15 pips and I aim for a 1:1.2 risk reward (I am risking 1 to make 1.2, and I do this because I leave 20% open as a runner and close the 80%, which would put me at a 1:1 if my runner were to stop me out at break even).

Sometimes I end up manually exiting out of trades when price is close to hitting my take profit, but price starts to go against me so I tell myself it’s ok to pull profits. I’m wondering if pulling profits early is a bad idea because if price goes against me, I take a full stop loss.

Can I be profitable pulling profits early and not pulling losses early? (My risk reward would be messed up, but maybe I could maintain a higher win rate?)

My thoughts on this I have 2 ideas on maintaining a 1:1+ risk reward

  1. I can close out a percentage of my open position once price gets to say, halfway to my profit target (which means I only have half my position open now). But would this mean I have to close my position halfway to stop loss target as well.

pros: I can secure profits and also move stop loss to break even for the rest of the trade. If trade goes against me, at least I made some profits while it was in profit.

cons: By closing out half my position, if price hits my take profit target, I won’t get the full amount if I would have kept the entire position open. Also, by closing out early and moving stop loss to break even, my trade doesn’t get much room to breathe (maybe it doesn’t need much room to breathe for scalping? Not too sure)

  1. Once I enter, I just let price either hit my take profit or stop loss.

pros: I do not have to manage the trade once I’m in it. The trade will have plenty of breathing room to run its course. If I’m bullish and there’s a little pullback, and it goes back up I will have the entire profit.

cons: Price could come 1 pip from my take profit, then turn around and stop me out. and I would not have had any profits made at all from this trade.

What are your thoughts on this?

Thanks,
A

2 Likes
2

I will open two trades on a pair on for taking profit early and the other for long term. Cut your losses

3 Likes
3

You’re profitable with doing that?

4

The wider context can make a huge difference. The long-term trend following trades I take have equal SL and TP, so that’s obviously a 1:1 r:r.

There’s no problem with this as I know that if the trend continues I will take another trade and another etc. So the probability is I will get 1:1. But I also know I’ll probably get more than 3 trades from the types of trends I look for. So if I take 3 trades off the same trend each at 1:1, that’s a net aggregate of 1:3. Its a lot easier to run 3 trades at 1:1 in a trend than find 1 trade at 1:3 which isn’t.

1 Like
5

How can you put what you said into relevance to my situation? Or am I not understanding the correlation?

6

I think you’re in danger of obsessing over r:r of an individual trade to decimal places. I’m suggesting its possible that taking multiple trades from better quality trends might eliminate your problem.

1 Like
7

My win rate isn’t great so that’s why I’m obsessing over keeping a good rr. I’m trying to become profitable.

Also,

What do you determine a “better quality trend”?

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By better quality trend I mean one that most closely meets the parameters you set for a trend that suits your strategy. Sorry if that sounds a bit round-about, but there’s no set definition of a trend so its impossible to have a set definition of a good trend.

Could come down to simple observation and logging statistics. Let’s say you have a long-term MA - you might find that 65% of long trade signals are successful if price is above the MA, and the MA is sloping upwards. Etc. etc.

1 Like
9

I think it really depends on your strategy. I can tell you that personally I use trailing stops 90% of times.
I have a couple of video where I explain my thinking process with real money if you’re interested let me know! They’re on Youtube :smiley:

3 Likes
10

This is key to being a successful trader - it is absolutely never a bad idea to take profit - forget what happens after you take it, the market has offered so just say thanks and move to the next trade.

You see all that stuff about letting winners run and cut the losses - so there is a sense that you are wrong about taking the profit - almost as if you have cut the winners - it’s total rubbish.

A wise old trader once remarked that trading is similar to an outdoor picnic - you eat your food and then you leave some, you are content.maybe the birds will come for the leftovers but you don’t care - you are content.

3 Likes
11

First I will take my profit back and after I will prefer to hold my trades for long term trading.

12

I normally take profit soon. If suppose, you always spend a lot of time to see the market. I am sure you will impact on your orders very much

13

@peterma

Interesting so the mantra letting profits run and is now wrong. Hmm

As someone who spent many years as a losing trader the only reason I survived was through letting my winners ride.

The wise (and very dead) Jesse Livermore said taking profits too early is exactly how you go broke.

1 Like
14

Gotcha, do you usually use 1:2 , 1:3 risk rewards then?

15

This is the whole purpose of my question. Johnscott31 so would you let a trade that’s 80% away from take profit run all the way back down to stop you out because your rule is to never pull profits early?

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@amatias2026 I mostly close half position at 10-20pips, move stop to break even and the rest of the position run by trailing stop or move behind the price until it reach TP.
Many trades I close early just like you and I find it not a bad idea, works for me. The price make pullbacks and gives the opportunities to get into another trade again and again, so you can collect small profits again and again instead of waiting for one to go your way.

2 Likes
18

@amatias202

I’d use a trailing stop and never set a profit target.

19

There are a lot of mantras and a lot of losing trades that started off as winners.

Even Jesse went broke in his career.

20

@peterma

Agreed on both counts but I think there is a strong mathematical argument (which I cannot articulate) for letting profits run providing it’s done with a trailing stop.

There is also strong psychological argument for not using profit targets.

21

There was early earnings, then for a long time it was not possible to earn. I already thought everything, I can’t stand it anymore. As a result, it turned out to defeat myself and continue to work. I do not regret it!