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Do You Use Partial Profit Taking?

December 5, 2011 by

Last week, I’ve described my point of view on the partial profit taking in Forex. In short, I believe (and support my belief with some simple math) that closing a part of profitable position before reaching the main target is a bad technique if you are using entry system with an edge. At the same time, many reputable traders employ partial take-profits (mainly the half ones) on a regular basis despite the fact that the only good environment for it is some completely random market. So I post this poll to find out the stance of the general public on this controversial topic. Feel free to express your position in details in the comments.

Do you take partial profits from your positions?

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If you have any questions or want to express your own opinion on the validity of using partial take-profit levels in Forex, feel free to post them using the form below.

6 Responses to “Do You Use Partial Profit Taking?”

  1. fx

    First of all let me say that the article was to the point and well, explained. I am referring to the article referred in this blog post and not this post itself :).

    As rightly mentioned in the article, taking partial profits depend on the situation and the confidence level about the trade. Confidence level with right grounds and not just the emotional confidence levels. If there are firm grounds/analysis behind the trade then I would let the trade go and the profit run and will not worry about taking the partial profits. But when the uncertainties are little high then partial profits would make sense. For an example let’s take the movement of EUR/USD during past couple of month or since the Greece debt issue surfaced strongly. This kind of movement can fail all your analysis as the moves are more driven by the sentiments than anything else and a small hope my cause an unexpected jump and a slight resurfacing of any doubts may cause an earthquake beyond the Richter scale. In this kind of scenario partial profit taking may be a good idea.

    Appreciate touching upon a good point.


    admin Reply:

    If you lost confidence in your trade, it’s better to close it all. For example, you had 55/45 confidence of the EUR/USD growing, after getting up 100 pips, you see some bad news from the eurozone and your confidence drops to 49/51 – now there’s no point to keep even half of the position open, it’s time for a completely new position. Conversely, if your confidence has dropped to just 51/49, there’s no point to partially close it, as your edge is still there.


    fx Reply:

    I will stay neutral on that. The issue is that it’s rather difficult to measure 51/49 or 55/45. Then again it dependson the situation. I was specifically talking about the given example where the effect of one news or development is a bit temporary but still we can’t be sure whether it will be temporary or not. Again I would say that you went for a nice topic and I apreciate that but my opinion was limited to some specific situations in the given example :)


    admin Reply:

    It’s difficult to measure the 51/49 or 55/45 as well as whether something is temporary or not, but when you enter a trade you make some assumptions about the market, and those assumptions should have some bias (bullish or bearish). Otherwise you could be entering the market at any given moment in any random direction.


  2. Keri

    Yes. Many successful traders use that technique. Are they stupid or they can not count? From your examples it is clear that using partial profit taking is less profitable and the math does not lie. There is a simple answer. Trading is about 90% PSYCHOLOGY and 10% trading and math. Partial profit taking enormously helps you overcome psychological aspects of trading. When you close half of your position and put stop loss on breakeven you have so called free trade. Otherwise why successful traders would use that technique having for sure systems with an edge


    admin Reply:

    Yeah, I agree that it bears a significant psychological advantage for traders with certain types of personal traits. At the same time, it can obviously be destructive by reducing the actual system’s edge if the trader doesn’t benefit from the psychological part of the technique.


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