How To Stay In Profitable Trades Longer

It's frustrating to exit a trade, only to watch potential profits disappear. However, this is a problem many traders face, and the good news is, it’s often avoidable with some adjustments. 

Here are three key strategies I use to stay in trades longer and maximise opportunities:

1. Always Know When Your Next Decision Will Be

The first rule I follow is simple: whenever you take action in the market, you should already know when or where your next decision will be made. This prevents you from reacting emotionally to every price move. Your decision point could be based on time (e.g., near the end of your trading session) or price (e.g., when a key market level is reached). Either way, it should be based on something logical, not emotional.

For example, making decisions based on round profit numbers like £1,000 profit is emotional. Instead, base your decisions on logical market shifts or changes in the trade’s probabilities. If your decision point is too far out or exposes you too long, optimise it over time. Even deciding to take no action counts as a decision, just make sure you always know when your next one will be.

2. Use a Context-Based Approach Instead of a Setup-Based One

Many traders use a setup-based approach, where they enter a trade with predefined stop-loss and profit targets, then hope the setup leads to a big move. This can create a rigid strategy that ignores changing market conditions. The problem is that market context can shift between your entry and your far-off profit target.

Instead, I use a context-based approach where I factor in potential outcomes along the way. For example, if the price moves into profit but encounters resistance, there’s a chance it could reverse. By considering multiple potential outcomes, I can reassess the trade and make decisions based on probabilities, not just the original setup.

3. Satisfy Psychological Needs with Smart Scaling Out

Sometimes, holding onto a trade longer can be tough mentally, even when it’s the right thing to do logically. To manage this, I occasionally scale out of a position, even if it doesn’t align perfectly with the trade’s logic. Scaling out means to close part of the position.

This helps satisfy the psychological need for instant gratification, allowing you to "nibble" at your profits while still keeping the bulk of the trade running. Scaling out helps you mentally stay in the trade, letting the rest of the position ride without the fear of missing out on banking some profit.

Final Thoughts

By knowing your next decision point, using a context-based approach, and managing the psychological aspects of trading with scaling out, you can stay in profitable trades longer. These strategies help you avoid the trap of closing too early and missing out on further gains.