The Dirty Secret About Riding Your Winners
Let your profits run is an expression that encourages traders to resist the tendency to sell winning positions too early. While this advice is offered by many, it is followed by few. This is because it is more difficult than it may appear.
Most traders tend to take gains off the table early out of fear that they will evaporate quickly.
So you often hear trader’s say LET YOUR PROFIT RUN or RIDE UR WINNERS. The thing about that advice is may important thing na hindi nasasabi dun. If you ask how to ride ur winners yung reply mostly is don’t sell too early or don’t have a stop loss na tight or cut loss na tight.
I will be honest with you. It has nothing to do with that. Riding ur winners or letting your profit run is all about……BASE.
YES! Your base. Your buy price. Your average price. Yan ang bottom line ng riding ur winners or letting ur profit run. Yan yung secret ingredient.
Sample you bought a stock at 1 peso. It went up to 1.5 pesos. It went up to 2 pesos. Then umakyat pa sa 2.5 pesos. After a while bumaba sya sa 2.3 pesos. Then 2.1 pesos. then 2 pesos. Nagconsolidate doon. Then nagstart na naman akyat. Traders who bought it above 1.9 probably locked in profit or sold na when the stock went from 2.5 down to 2.3.
Ikaw naman since 1 peso ang average mo sit there and just watch ur profit grow…nabawasan konti..konti pa..then nag grow ulit…
So if you bought a stock at umangat, kapag mababa average mo masyado let’s say above 50% gain ka switch timeframe. If you enter at Daily TF and after four days nasa 70% gain ka na switch to weekly timeframe and let your winners run. If it keeps going up switch to a much higher timeframe. Same exit indicator but different Timeframe. Repeat this until your indicator tells u to exit.
Now paano mo masabi na mababa base mo? Subjective yun. Me I switch timeframe kapag over 100% na gain ko. Same indicators gamit ko at same plan na pag exit pero different TF.
So to drive a point. In order to let your winners run you must have a low average price or if you have a low ave price, you can opt to let your winners run