Book Profits Early: Yes or No?

The question I am asking you to think about today is: if it is ok to book profits before hitting the profit target. The answer to that question actually depends on each trader and thier trading plan. However for me the answer is yes, if you have a minimum of 1 to 1 risk to reward ratio. I spoke briefly about this in the article I wrote yesterday about trade size.

The bottom line is this, you must control risk. Next do not book profits early unless you get a minimum of one to one. However the key is to discipline ourselves to get a much greater win to reward ratio than one to one. If we acheive 1:2 and our profits have not hit the target than it is ok to book early. This is because you do not want to lose the gains you have already made.

As always with trading the discipline is critical. I have prepared a video about a trade I just closed and I actually did not have to book early because the price hit the target.

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  • Yes, it is so important to follow your plan, very critical step for success. It is good that you are noticing this.

  • Sayed Haider

    well, its a very good topic for discussion as to book the profit early or to wait for the target as per the trade plan. Now because I am not a person to keep the patience, I never ended the trade according to plan. When I see some profit I take it immediately. But this is a negetive approach. I think each day I trigger almost as an average 50 trades, most of them with scalping. sometimes I enter the trade with a SL and TP orders and just close my laptop. These trades quite oftenly end with good profits. This means our P/L window plays with our emotions abd we close the window before it reach target. Market moves up and down sometimes it give us profit and we dont take the market then goes other way and we feel regret that we should have taken the profi
    So its my idea that we enter a long position trade better to close the window and wait for the target to hit.
    If we are doing scalping then thats the other case.

  • JT thanks for the well thought out comment, I cant really say much about stocks because I dont watch them at all. I couldnt event tell you what the market is at right now. I follow some fundamental news but generally I can determine trends from the charts and base trades off of that.

    I saw your audjpy trade post earlier, I liked what I was hearing based on your style. Keep up the good work.