Holding onto profitable trades is almost a universal challenge for all traders. Compared to identifying the right direction and finding the right entry point, holding onto a profitable order seems to be ten thousand times more difficult.

At this point, some might argue, "Brother Ba, are you exaggerating too much?"

You can check your own trading records to see how many times you've closed a position for a small profit, unable to resist the urge to lock in gains? How many times have you closed a position, only to see the market soar afterwards, leaving you regretfully pinching your own thigh?

It is human nature to seek benefits and avoid harm. When holding a profitable order, there is an instinctive fear that the market might reverse, leading to less profit or even a loss, prompting an early closure to secure the gains.

The result is that when you lose, you lose a lot, but when you win, you win very little, leading to a cycle of increasing losses. Once you enter a state of continuous loss, your mindset is completely ruined. You want to make money but fear losing, going back and forth, becoming more and forth, and increasingly cautious, so much so that even the best opportunities no longer yield profits, leading to a vicious cycle.

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Therefore, if you don't solve the problem of holding onto profitable trades, you won't make money in trading. In today's article, I will explain four methods to help you hold onto profitable trades and address this issue.

1. The method of reducing position size after profit

Many people like to shout loudly: "Cut losses short and let profits run!" However, many traders who have actually engaged in trading find it very difficult to let profits run in practice.

Because the market often retraces its steps, and sometimes it's even more frustrating—after moving for a while, it reverses, turning a profitable trade into a loss-making one. After experiencing this torment a few times, it becomes impossible to hold onto profitable trades, and you'll want to run at the slightest profit.

At this time, we can actually make some reductions in our position size, which will significantly ease our mental state.When an account starts to show an unrealized profit, it is advisable to first reduce a portion of the position, securing some of the gains in your pocket. Even if the market turns back or the order is stopped out, there will be no loss or minimal loss. This will give us a psychological advantage, eliminating the fear of losses, and naturally, we will be able to hold onto the orders.

Trading is essentially a psychological battle. By overcoming oneself mentally, one can also overcome others.

There are some techniques to reducing positions, and I would like to share my own rules for doing so.

(1) At what point of unrealized profit should one start to reduce positions?

In practice, one should only consider reducing positions when the unrealized profit space and the stop-loss space reach a 1:1 ratio. At this point, a clear trend has been established, and if the market retraces, it might indicate a real reversal. Reducing positions at this time offers a high cost-performance ratio.

(2) What is a reasonable proportion for reducing positions?

A position reduction of 30% to 50% is reasonable.

Our goal is to hold onto large market movements. Reducing positions at the start of a trend is a protective action aimed at maintaining a good mindset. However, reducing too much early on can significantly impact profits if the market continues to move in our favor, which would be counterproductive.

I personally prefer reducing positions by 30%, as this limits potential losses while still allowing for substantial profits if the market continues to move favorably.

(3) The operation of reducing positions in multiple batches

[Note: The original text was cut off, so the translation ends here.]As the market's operating space increases, the higher the likelihood of market pullbacks or reversals, gradually reduce positions to lock in profits. For instance, with a profit-to-loss ratio of 1:1, reduce the position by 30%, and then at ratios such as 2:1, 3:1, 4:1, and so on, progressively reduce the position in proportion. The higher the profit locked in by closing positions, the better our mindset for holding positions.

Note: For more specific methods of reducing positions, I have written about them in the past on my public account (Eight-Digit Garden). Interested friends can look for it themselves.

Some may wonder: As the market runs, isn't profit reduced by continuously reducing positions? However, don't forget that in a reversing market, the operation of reducing positions locks in profits, and even if the order is stopped, the loss can be much less.

Take the profit-to-loss ratio of 1:1 and reducing the position by 30% as an example. When you have made a profit of $100 and start to reduce the position, you can pocket $30, and at this point, your position also becomes 0.7. So even if you lose everything, you will only lose $70. $70 - $30 = $40, and your total loss is $40.

If at this time the market continues to be profitable, you still have 70% of your position, and the profit will also be good.

If at this time you encounter a wide range of volatile market conditions, we may reduce the position more times, and the loss will be less, or even no loss at all.

In the long run, reducing positions is not only beneficial for the stability of the mindset but also has a significant profit advantage in trading strategy.

Now, let me talk about another method that does not reduce profits while the market is running.2. Stop Loss Protection + Trailing Stop Loss

The logic behind this approach is the same as the one mentioned above for reducing position size; it's just a different method. Both aim to control losses, lock in profits, and provide a more solid foundation for our trading psychology, overcoming the fear in trading, and holding onto profitable trades.

Stop Loss Protection: This involves adjusting the stop loss of an order to the entry price once the order has reached a certain level of profit. Even if the market reverses and the stop loss is triggered, there will be no loss, and the mindset for holding the position will be positive.

Trailing Stop Loss: After the market has moved and the order is in profit, the stop loss is adjusted according to the development of the market trend. This way, even if the market reverses and the stop loss is triggered, the outcome of the trade will still be profitable. If the market continues to move in the favorable direction, the profit can be substantial.

Several issues with stop loss protection and trailing stop loss:

(1) How much space should the market move before applying stop loss protection?

At least a 1:1 reward-to-risk ratio is required before adjusting the stop loss protection. Otherwise, if the adjustment is made too quickly, a slight market pullback could trigger the stop loss, resulting in a small margin of error for the order, which might miss out on profitable opportunities.

(2) What is the criterion for a trailing stop loss?

In practice, trailing stop losses are managed using technical indicators. A common method is to use the turning point of the market's pullback as the standard for movement.

On the other hand, the trailing stop loss is adjusted based on the EMA90 moving average. As the EMA90 moves downward, the stop loss is adjusted accordingly, until the price breaks through the EMA90 in the opposite direction.Summarizing the above two points:

(1) Reduce position size.

Disadvantages: After reducing the position size, a part of the position is lost, and some profits will be missed when the market moves rapidly.

Advantages: By only reducing the position size without adjusting the stop loss, the order has a larger margin for error. Even if the market retraces, the order remains safe, and more profitable market movements can be held onto.

(2) Stop loss protection and trailing stop loss.

Disadvantages: This reduces the margin for error of the order, and it may encounter a market retrace that triggers the stop loss, only for the market to continue in the same direction afterward.

Advantages: It maintains the full position, and when the market moves rapidly, the profits are substantial.

3. Light position entry

Actually, the issue of not being able to hold onto winning trades falls under the category of trading execution. Let's extend the discussion to the issue of trading execution.

(1) Only with strong execution can trading be profitable.The trading system → trading plan → execution of trades, these are the three fundamental steps to profit from trading. If we liken trading profits to 100, these three basic steps are the 1, while capital and position sizing are the 0s that follow. Without the initial 1, the subsequent 0s are entirely meaningless.

(2) Light positions play an absolute role in execution.

For example, consider a $10,000 account.

A: Place a 1-lot order and lose $1,000. After three consecutive losses, the total loss would be $3,000, which is a 30% loss of the account.

B: Place a 0.1-lot order and lose $100. After three consecutive losses, the total loss would be $300, which is a 3% loss of the account.

When encountering situations A and B in trading, it should be very clear to everyone which trading scenario allows you to continue trading with more peace of mind.

Therefore:

Light positions → No fear → Persistence in holding or trading → Achieving low profits

Heavy positions → Fear of loss → Inability to execute → Trading losses

With this comparison, everyone should be able to make their own choice.Regarding light position trading, there are two additional points to consider:

(1) Light position does not mean always trading with a light position.

As your trading skills improve, you can gradually increase the proportion of your position. It's similar to weightlifting during a workout; you may start with only 10 kilograms, but gradually you can increase the weight, and you will find that your limits are continually being pushed.

(2) Positions that are too small are also not advisable.

With positions that are too small, the gains and losses are minimal, and most traders will not take them seriously.

For example, if you have a $10,000 account and only open 0.01 lots each time, the profits and losses are too small to matter, and you won't feel much impact. When you become indifferent to gains and losses, you cannot take trading seriously.

Here's a standard for light positions:

In forex trading, for an account with $10,000, the position size for currency pairs should not exceed 0.5 lots and should not be less than 0.1 lots. For gold and crude oil, the position size should not exceed 0.3 lots and should not be less than 0.1 lots.

From years of experience, with these position sizes, the mindset tends to be relatively stable.

4. Experience a period of declineMany people cannot hold on to profitable trades because they fear losses and lack confidence in the market trends. Therefore, it is crucial to build confidence in the market trends.

The market often oscillates between volatility and trends, and trading systems also have their own periods of decline and profitability. It is said that a trader who has not experienced a period of decline is not a true trader.

When you have truly gone through a period of decline and survived it to reach profitability, you will have a new understanding of the market trends and will have full confidence in the upcoming trends.

Many people suffer trading losses because they do not understand the basic patterns of decline and profit in trading systems. When they encounter consecutive losses, they panic and do not know what to do.

Below, I will show you several diagrams of decline and profit cycles, using the trading system from my course as an example.

In the first diagram, there are 4 consecutive stop losses over 29 trading days, which is a standard decline cycle; in the second diagram, there are 4 consecutive profits over 29 trading days, which is a profit cycle.

This trading system sets a single stop loss at 1% of the principal, and during this short decline cycle, a loss of $4,000 is incurred from a $100,000 principal, which can make many people feel uneasy and hesitant to continue executing the system.

However, once you get through this decline cycle, you enter the profit cycle. In the profit cycle, due to the trading system's set profit-to-loss ratio of 2:1, the profit amount reaches $8,000, directly covering the previous losses.

So when some people encounter a decline cycle, they start to doubt themselves and the trading system, questioning whether the system can really make a profit, whether to persist, or whether to change the trading system.However, once you have experienced the decline cycle and reached the profitability cycle, you will become indifferent to such situations: it's just a matter of stopping losses a few times, no big deal, just keep persisting, and you will surely reach profitability, and once you reach profitability, it's a significant wave.

Therefore, if you can't hold onto profits and can't stand losses, it must be because you have not experienced the cycles of decline and profitability, and you don't have your own trading system. Trading on a whim is actually the most fatal thing in trading.

I often emphasize to my students that after learning trading techniques, it is essential to conduct long-term reviews of trading systems and engage in simulated trading before entering live trading. This is because only then can you anticipate the impact that market conditions will have on you.

If you have gone through all of this in advance, in the real battle of trading, you are essentially having an "open-book exam," and there is no additional difficulty, which means your chances of winning are several times higher than others.

So, let's avoid stepping into the pitfalls with real money in the trading market if we can anticipate them in advance.