May

28

Buy SellI have been giving some thought to the adage "cut your losses and let your profits run." It has always rung hollow to me. Maybe I am missing something, but it seems retrospective and such decisions can only be made after the fact and not prospectively. It ignores all those unrealized profits and losses that often reverse over the course of a trade. All those winners that were supposed to run that turn into losers and all those losers that we are told to cut, that turn into winners. To argue the other side, I suppose one could just set a stop loss exit on all trades and no stop on the upside. This would reduce risk and profits, as one would expect, no great pearl of wisdom. I believe the adage should be reworded to "allow your winners to become losers, but don't allow your losers to become winners," or "realize your losses and make less money." Very catchy.


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