Let Your Profits Run

AAA

DEFINITION of 'Let Your Profits Run'

A saying often used in investing that acknowledges the tendency among investors to sell winning positions too early. Most traders tend to take gains off the table early out of fear that they will evaporate quickly, while they also tend to hold onto large losing positions in the hope that they will turn around. The key to letting your profits run is to not panic when volatility increases and to maintain your convictions about why you entered into the trade.

INVESTOPEDIA EXPLAINS 'Let Your Profits Run'

Cutting losses before they become substantial is a key part of implementing this strategy. Successful investors can lose over half the time as long as losses are not allowed to compound. Giving profitable trades room to continue their upward climb takes a tremendous amount of courage, but it will likely pay off in the future.

RELATED TERMS
  1. Buy And Hold

    A passive investment strategy in which an investor buys stocks ...
  2. Volatility

    1. A statistical measure of the dispersion of returns for a given ...
  3. Risk Lover

    An investor who is willing to take on additional risk for an ...
  4. Nervous Nellie

    An investor who isn't comfortable with investing and the risks ...
  5. Risk Averse

    A description of an investor who, when faced with two investments ...
  6. Panic Selling

    Wide-scale selling of an investment, causing a sharp decline ...
Related Articles
  1. Trading Strategies

    Scalping: Small Quick Profits Can Add Up

    We look at different styles of scalping, and how they can all be very profitable.
  2. Trading Strategies

    10 Tips For The Successful Long-Term Investor

    These guiding principles will help you avoid common folly during the decision-making process.
  3. Active Trading

    Sell Growth Stocks The IBD Way

    Savvy investing is all about learning some smart rules and sticking to them. We give you the rundown.
  4. Active Trading Fundamentals

    The Stop-Loss Order - Make Sure You Use It

    It's a simple but powerful tool to help you implement your stock-investment strategy. Find out how.
  5. Fundamental Analysis

    Cash Flow From Operating Activities

    Cash flow from operating activities is a section of the Statement of Cash Flows that is included in a company’s financial statements after the balance sheet and income statements.
  6. Trading Strategies

    Under what circumstances is short selling advisable?

    Find out when short selling a stock is profitable and what an investor should keep in mind before deciding to pursue a short sale investment strategy.
  7. Fundamental Analysis

    What are the differences between a change in accounting principle and a change in accounting estimate?

    Learn how to differentiate between a change in accounting principle and a change in accounting estimate and how accountants should treat each type.
  8. Fundamental Analysis

    What are the differences between gross profit and net income?

    Find out how companies determine gross profits and net income, and how these figures provide quick snapshots of their financial health.
  9. Investing Basics

    10 Common Financial Terms Every Newbie Needs To Know

    In order to get a better understanding of what you read in markets news, we’ll briefly explore the terms you commonly encounter.
  10. Chart Advisor

    ChartAdvisor for Aug. 8, 2014

    A weekly technical summary of the major U.S. indices.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center