Most Important Trading Skill

As a beginner trader, one of the most crucial skills you'll need to develop is "letting your winners run." This skill has the power to transform your trading experience and fast-track your career in the financial markets. In this article, we'll explore what letting your winners run means, how to implement it, and provide actionable tips to help you get started.

What is Letting Your Winners Run?

Letting your winners run refers to the practice of allowing a trade that has already reached its profit target to continue running without cutting it short. This approach requires discipline, patience, and a deep understanding of the market trends and momentum.

Why is Letting Your Winners Run Important?

Letting your winners run is essential for several reasons:

1. Maximizing profits : By allowing your trades to continue running, you can maximize your profits and increase your overall return on investment.

2. Developing a winning mindset : This skill helps you develop a winning mentality, which is critical for success in trading.

3. Improving trading skills : Letting your winners run forces you to stay focused, disciplined, and patient, essential qualities for any trader.

Ultimately, you must master the skill of analyzing the market momentum and take this decision case by case basis.

Three Essential Steps to Mastering Letting Your Winners Run

1. Keep trade size small : Start by keeping your trade size small, even as small as 1 share. This will allow you to take on less risk and focus on reviewing market momentum.

2. Enter trades in the direction of a trend : Focus on identifying trends and entering trades in the direction of the momentum. Don't try to time the entry or look for patterns; instead, follow the trend.

3. Stay in the trade until your "Trend Indicator" says otherwise : Stick to your strategy and stay in the trade until your Trend Indicator signals that it's time to exit.

Setting Up Your Trading Platform

To get started with letting your winners run, you'll need to set up your trading platform:

1. Choose the right instrument : Select a reliable instrument, such as SPY ETF, which offers extended trading hours and has a relatively stable price action.

2. Choose a comfortable timeframe : Start with 15-minute or 1-hour timeframes, it should not be too fast so that its hard for you to follow the price action or too slow. I highly recommend to use a Renko chart, which would eliminate the time factor entirely and you can focus on the price action.

3. Select the right Trend Indicator : Use an indicator that shows clear trend direction, such as TrapZone Pro, which also provides momentum analysis in the same chart panel.

Important Reminders

As you begin to implement letting your winners run, keep the following tips in mind:

1. Focus on one instrument at a time : Avoid trading multiple instruments simultaneously, as this can lead to distraction and decreased focus.

2. Keep trade sizes small : Resist the temptation to scale up too quickly; remember, this is a learning process and you are training your mind for analyzing the momentum.

3. Exit trades at the end of the trend : Don't be afraid to exit your trades when the trend changes or momentum fades.

4. Incorporate lessons learned into your strategy : As you gain experience, incorporate new insights and strategies into your approach.

Putting it All Together

Letting your winners run is a skill that requires becoming a master in judging the market momentum. By following these steps and tips, you'll be well on your way to mastering this essential trading technique. Remember to stay focused, adapt to changing market conditions, and continually refine your strategy.

Here is a video i published on this topic:

Conclusion

Trading can seem straightforward, but the journey to becoming consistently profitable is filled with challenges. By embracing letting your winners run and staying committed to your strategy, you'll set yourself up for success in the markets. Happy trading!