How Many Times Have You Exited a Position Early?

Do you have a problem with exiting your positions too early? I always have. It’s one aspect of my trading that concerns me because I’m never sure if closing it early was the smart thing to do. Let me give you an example which just happened to occur today. I went long on the EUR/CAD before the European session open. I went to bed and woke up to see the position up 80 pips. I had a 100 pip stop loss and a 200 pip target. I was a bit surprised to see it up this much so quickly. I thought about it for a minute and decided to close the position and take the profit. Why violate my pip target? Based on my experience with the ebb and flow of the currency market, I figured there was a good chance that the price will not continue in my direction and retrace, wiping out any profit I had. I’ve seen this happen so many times. Today, this didn’t happen. The EUR/CAD continued going up and would have easily hit my 200 pip profit target. This frustrates me more than losing. Here are a couple of ways I’ve handled a position that goes in my favor by a substantial amount:

In scenario #1, I feel good about the trade if I close it out and then it does exactly what I thought it would, turn against me. I don’t feel so good if the pair continues in my favor after I’ve closed it and would have hit my target.

My feelings in scenario #2 and very similar to those in scenario #1.

In scenario #3, I feel great about the results of the trade.

So which is better, any of the three scenarios or flat out losing money on a trade? I think not losing money is best but the first two scenarios can sometimes lead to losing money. If I’m not getting a decent reward/risk because I’m exiting a position too early, when I do hit that losing streak (trust me, it will happen), my losses could be much greater than my gains. How many times have you closed a position early when it at a negative and not going in your favor? I can count the times on one hand.

I’d love some feedback on what your experiences are and if you can relate to my possible problem. It hasn’t affected my profit the last month and a half though. I’m up over 13% this month alone but like I said, this could be short-lived if I don’t address this now.