Forex: how to stay in the game?

There are many many times that we take a position, it moves higher and higher and then starts to pull down. Maybe it loses 30 cents one day, then 50 cents the next day. By the third day it's hovering at or even violating our stop. If we feel the pull down is of no fault of the company itself, we might let it fade the stop, or finally just fold it up and move on.

But that creates the "why didn't I sell?" Syndrome. We all kick ourselves when the market is at 103.00 one day, then 102.60, then 102.25, and we finally pull the trigger at 102.00, and wonder why we didn't sell at the top. Well the answer of course is that no one really knows what the top is. But that's not what I want to focus on here today.

Everyone has different trading parameters. Some are comfy holding a position down 4 dollars. Some are in a panic if it's down 10 cents. Some are looking for 3, 4, 6 month time frames. Some are looking at today, tomorrow. We all have a different view of what we are doing and for how long.

I never enter a trade with the idea of it being a one day event. The fact is I don't have a time limit or a price target to shoot for. Overall market mood, bad news, economic reports, etc, can all conspire to make a price drop, and I'm not into holding through the pain like some are.

So, what's my point? Just this folks. If you enter a trade and it's climbing nicely and then starts to fade, there is no rule that says you have to hold it to our stops, there's no rule that says you have to hold it over night, nothing. In other words, if you are comfortable with the gains a trade has made since the time you opened it, then by all means sell it. If it goes on for more, don't kick yourself, say a prayer of thanks that you got "some" and now someone else is getting "some".

I will occasionally hold a position below my initial stop. Maybe I really believe in the story, or maybe I just think it wasn't right that the market got tossed in the trash in sympathy with a sector leader or what have you. But once you do hold it under your stop, each day becomes more dangerous. Many times it doesn't resolve itself higher and I have to sell for a bigger loss than I should have.

Over the past few weeks, with the market being so incredibly choppy, I've seen several positions move up sharply and then just as sharply fade back. Holding to the stop or worse like holding below my entry has been a bad bet more times than not. So, my word of advice in a market like this is to not try and overstay your welcome. Until we bust out or break down out of this range, taking what you can, versus sticking to self imposed stops, is probably more profitable.

The best way to maximize profits and still "stay in the game" is to sell portions of your position. A position that's up for you a dollar or two in a couple days, is a victory, and taking one third or one half off the table locks in that portion of profit and lets you be a bit more relaxed with the balance. In a choppy market, you simply "have" to be more nimble, and act a bit quicker than you would in a trending market. It's a lot more work, but it's certainly worth the effort.