A reader just asked a very good question: I have a big profit but I’m getting nervous. What should I do.
Me answer is pretty straight forward. If you have a nice profit and you are afraid of watching it slip away, go ahead and book at least a partial profit.
That gives you a lot of flexibility.
Lets say you are long USD/JPY at 80.00. If you sell half at 83.00, your average price on the remaining long is 77.00.
If you decide you still like the position, you can add to it on dips and sell on rallies, improving the average further.
Ideally, you’d want to set a trailing stop on the entire position to preserve a chunk of your profits.
In the example above, you may want to use a level of 82.00 or 82.50 to stop out the whole position and take a fresh look.
That strategy keeps you in winners longer and lets you take advantage of the intraday ebb and flow…
