My personal rule for avoiding letting a winning trade turn into a losing trade:
I move my stop loss to break-even (or just below the lowest low after I got into the long trade – vice versa for a short trade) after I reach 80% of my first logical profit objective. That’s what I typically do and that’s why I generally don’t take a loss (very small if any) on trades that 80% in my favor towards my profit objective. It’s really that simple All too often traders’ greed takes over and they decide they ‘deserve’ that last point or couple of points of profit…hoping for the ‘home run’ trade. I have to say that you probably won’t make it in this business if you’re constantly looking for that ‘home run’ trade. You can certainly look to do this, but only after your logical profit objectives are first hit. And you also must be trading multiple contracts in order to ‘trail’ your stop for that potential ‘home-run’ trade.
There’s a second real important trading rule you should also remember when day trading…
If you’re somehow still in a day trade as we near the market close, you should take off your position before 4:15 PM EST. This will sometimes give you a loss instead of the profit you think you might get if you hang on just that little bit longer. I personally typically do not take trades in the last hour of trading (3:15PM EST to 4:15PM EST)… but that’s just me and my personal trading style and preference. However, if you do decide to trade in the last hour just be sure to be out of the market by time it closes at 4:15PM EST. This rule of course only applies for those of you that day trade.
Just remember this: if you want to make it as a professional trader, you trade on probability, not hope. You have to trade your plan. That means you have to sometimes just bite the bullet and accept that you’re not going to make money on a particular (day) trade. So, simply get out according to plan, and approach the new trading day with a fresh and clear mind.
After all, letting a day trade go overnight is not part of your plan as a day trader, is it? And the hope that the overnight session might make you whole again is just that: a hope. Believe me when I say ’you are only inviting disaster when you deviate from your trading plan’. My strong suggestion (after many years of experience) to you is that you do not let greed or fear overrule your trading decisions. If you do, becoming a successful trader will be farther from reach, I can assure you of that.