Guide to Day Trading Strategies

Selling Winners Too Soon
If you enter a trade that had a good pro
À
t potential and it 
À
t into your trading strategy, the last 
thing you want to do is sell the trade before it has had a chance to work. If you are up 10 cents 
on a trade that has the potential to make 50 cents, there is no reason to sell it. Why do so many 
traders sell their winners too soon? It is because the fear of loss has guided their decisions. It 
is the fear of the small winner turning into a loser that convinces us to sell the trade too soon. 
Just as a loser isn’t real until you hit the sell button, a winner isn’t real until you’ve hit the sell 
button and locked it up. In the short term we feel happy to have locked up some pro
À
t, even 
if only a small one, but the big picture is that you are forming a habit of capping your winners. 
To be a successful trader you have to cap your losers and let your winners run. You will want 
that occasional big winner, because those will tide you over during periods of slow trading. A 
trader that sells winners too soon and holds losers too long has the habits of a failing trader. 
To avoid failure these traders must address how their emotions are in
Á
uencing their trading. 
Instead of selling the full position when sitting on a small pro
À
t, I combat that urge by selling 
a partial position and adjusting my stop. This means I will walk away with a small pro
À
t (not a 
loss), but still have a position in the trade to let it realize its full potential. This is called scaling 
out. Scaling out is a great trade management method of keeping partial positions with a good 

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R O S S C A M E R O N
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cost average. To maintain discipline, I refuse to sell my 
À
nal position until I get stopped out by 
a valid exit indicator.