Taking partial take profits

You may find this interesting. I know a man who has been trading for a living for decades. He is probably in his seventies now. I have visited him once while he was on the job, trading, that is. I have spoken to him numerous times on the phone in the past and he has shared many tidbits of knowledge with me about trading.

One of the things he mentioned to me is he asked an old timer trader one time, to look over his shoulder while he was trading to maybe get some advice. When it was all said and done the old timer said to him, Mclaren, you need to learn to take a profit while its there. This man than told me he checked all his past trades and found out the old timer was right, and that he, my friend said to me he was doing it wrong all these years of trading without taking partial T.P.'s.

Hope this helps!

it's the same as trading two accounts with two different strategies, eg. one with a rr of 1:3 and one with rr of 3:1.

let's say you use stop losses, would you risk 3 to gain 1 ? yeah it gives better compounding but what if you encounter a huge losing streak ? your account would be in huge dd.

also, the nature of the market suggests that it's better to let the profit run.

MY opinion..

i take profit when i am happy with the amount you can all ways get back in

Well, that means you set your TP positions based on current movements of the market; not any specific target during the trade position?

Taking partial profits is pointless in most cases. Especially for short term trading styles.
The same thing is true for trailing stops.

Both of these practices tend to reduce the expectancy per trade.

And this is not my opinion. These are the results I get from backtesting 1000's of different strategies for the last 5-6 years.

Partial profit talking is good if you are a long term trader and have a big profit target. Then you can take a partial profit of your trade. But if you are a short term trader and profit target is maximum 40 to 50 pips or so, taking partial profit is not a good idea. You should rather develop your skills for more accurate trading. It's just my opinion. Every trader should have his own trading style.

Scaling out helps to "smooth" your equity curve and has positive psychological effects, but it will always lower your profits, just as "break-even" does! I have tested it a lot of times (whole position vs partial TP), and the conclusion is always the same. As long as your R:R ratio is good you should not worry about lower profitability though.

I hope this adds to the discussion... (this applies to nonFIFO brokers)

There's virtually no documentation (or discussion for that matter) regarding the correct way to (manually) partially close open positions in metatrader without accruing additional fees, however, there are a couple of relatively hidden features in Metatrader called "closeby" and "multiple-closeby" that do such that. You can find a somewhat vague description of what these commands do in the docs, but these descriptions don't really set off any light-bulbs, and I'm guessing for good reason - it benefits the brokers. What these operations do, in short, is allow the trader to get creative with position sizing much like the newer netting accounts with some MQL5 brokers. The best way to understand how it works is to look at an example...

Let's say you open a long position with 1 lot @ 1.0000. Some time goes by and now you want to close 50% of that position - so you sell 0.5 lot @ 1.0500. There are two ways to treat this "position":

Traditional way:

1. You have two floating positions creating a partial hedge for a net position of 0.5.
2. You hold the hedge until you are ready to take-profit on the remaining position (potentially accruing negative swap)
3. You close both orders and pay 1.5(Spreads+Commissions) + 0.5(swap)

Close-by:

1. You temporarily have two floating positions. The net position is 0.5
2. The platform shows you have 1.5(Spreads+Commission), but this is only temporary
3. You instruct the broker server that your intention for the 0.5 opposite order was to net your position by using 'closeby'
4. Your new open position is 0.5. There is no longer any open floating "hedge". The broker server reconciled the transaction as partially closed. You didn't accrue any negative swap and you didn't pay the extra 0.5(Spreads+Commission)

How to use close-by:

1. When you have any amount of "hedge" go to the trade window and right click on any of the hedged orders and select modify or delete. This will bring up the order management window
2. Select multiple-closeby from the Type dropdown menu. Note: you have to have hedged orders for this to even appear
3. Confirm the orders you want to reconcile in the window and click the multiple close by button

The order is then reconciled as "closed by hedge" at the broker and the additional fees are subtracted from the net position.


Now those who want to get creative with manual pending orders can use multiple pending orders to scale into and out of positions without accruing any of the additional fees normally associated with "hedging" strategies. There is one important caveat, however, if you're using pending orders for scaling and aren't at your terminal make sure you use close-by before rollover or you will be charged the net-swap (long_swap+short_swap) if you use close-by after the rollover period (still no extra fees though)