How to hold a winning trade?

I am not expecting an exact answer on this....but, my method is very good at entering at the top, or bottom of an exhausting trend.

Today is a good example. I sold an SPY call at $4.95 near the top. It went down and is currently trading around $4 so I am about $1 in the money.

I like the trade and think it will eventually go down further. I also think we may get a bounce tomorrow.

So how do I know when to take my $1 winner, or let it bounce against me, maybe as far as flat?

There is about $3 in premium in it since I shorted it, this will come to me if it stays flat from here until its April expiration.

 

OP,


I will not answer the question you asked in your post because - I do not know your situation - the stock - or you


However the answer to your subject line “ How to hold a winning trade”


Easy – the same way you cut a loser – Detached – Objective – Discipline

Answer = Easy

Doing it = Is another thing altogether till you know it


Redneck

 

How to hold a winning trade?

If it is winning, hold it, with both hands.

Now use a trailing stop or with options, u can use a hedge.

Let the stop trail the profit, or just move your stop or place a hedge where u can't lose on the trade....

As it approaches your target, u may want to adjust this stop.

 

Easiest way is to take half off at a certain target, then let the rest run or stop out at break even. This takes away the remorse if the position returns to the entry price. You get at least some payoff for the effort, then it's easy to let the rest run.

 

trailing stop, if you are trading something volatile, like leveraged ETFs make sure you have a nice cushion, but if it is something like a utility stock, keep it tighter.

 

Seriously, put your hands under you ass and sit on them... you think I'm joking... I'm not - actually put them under your ass.

Try it tomorrow - worked for me.

B

 

If you have the ability to pick your entry like you say you should have a pretty good idea of how far your trade might run until the next turn. Set a target for that area and take some off there. Maybe let the rest run with a trail. I have had better luck with targets than I have with trailing stops. If I hit my target it is a successful trade. There is always more action tomorrow and the day after that and the day after that.

 

That's the ticket. Do the analysis and set a reasonable limit as a target. If there's momentum, you may want to change to a trailing stop after your target is hit. Should a head & shoulders develop and the move weaken, change it to a tight stop. Maybe you'll get lucky, maybe you wont, but you're protected.

 

Agreed. I really do not like trailing stops much as you end up with much smaller winners.

I only have the one call short so I am either in or out with this trade.

Although the SPY is sitting on support now, my method tells me it is likely to break down through it. Regardless, going up from here will not be easy.

I will watch it early and see if this support holds, if it does I will probably exit.

 

In wild choppy times it can be better to take profit and re enter.

If you're expecting a bit more out, why not go old school, and throw you up a good old fashioned SAR. Keep it till it switches.