TLM Q&A Blog: How Do I Stay In Positions Longer?

There is nothing worse than covering a position early when you are up +$.20 cents in a stock and it goes into your target that is $1.00 lower…

Fighting the temptation to take money off the table early before your target is tough, especially when you are a newer trader. The urge to lock in profits immediately when you see green can cause a ton of anxiety and stress while you’re in a position, which causes you to make bad judgments.

Today, I really wanted to sit down and go over some of the best methods I have found that help me stay in positions longer and remain patient until the stock hits my target. Especially if you have a ‘scalping’ mentality, making the adjustment from closing out your trade early to holding for a bigger move can be a hard transition, but following these methods will help.

1. Minimize Your PnL Box

Whenever I talk to a new trader and they are struggling with not holding positions long enough into their targets, usually they all have one thing in common…

Their PnL box is in the center of their screen. When you are in a profitable position and the green numbers keep flashing in front of your face, it is tough to sit through pullbacks and watch those unrealized gains fade. Even if you know that pullbacks are healthy for stocks and you have to be patient, watching your PnL fluctuate creates anxiety.

The solution to this is simple. Put your PnL box in the upper corner of your screen, or on a completely separate monitor, and just trade the chart. Understand that stocks don’t just go straight up or down from your entry to your target, and that price fluctuations/pullbacks are normal and healthy parts of the move. Trade the chart, and don’t focus on your PnL.

2. Use Trailing Stops

A lot of new traders don’t use these, but they can be very helpful when you are trying to hold your positions for longer. Using a trailing stop while you're in a position will help you stay in positions longer because they ‘hug’ your position. As the stock moves in your direction, using a trailing stop will give you a sense of security of a safety net that you will lock in profit no matter what. The stock will either hit your ultimate target or stop you out early for profit. Simple. Both scenarios are a win in your book.

3. Scale Out Of Your Trades

Whenever you are up on a position, it is good to lock in some profits. We never truly know where a stock will go, even if we have a consistently profitable system. Locking in some profits as the stock moves in your direction towards your target will help ease the anxiety and fear of going ‘round trip’ in a position. Our job is to extract money out of the market every day, so scaling out of trades and locking in some portion of profits as the stock moves in your direction will allow you to do just that.