Buying Pullbacks / Taking some profits, % of orig position?

[RickAns]

Hi all,

I used to have the All In / All Out thought process of trading. More recently been looking into system strategies that use adding to position by buying on pullbacks and reducing by taking some profits by selling on strength. Thing is, most of what I have read about doing this do not offer suggestions of what percentage to the original position one should use as a gauge. So I wanted to ask you traders that do this, roughly what percentage of your original position size do you normally use?

I'm asking more from a swing trader style position of holding the stock for days to weeks on the long side while following the trend. Not so much as from someone who trades in and out of a stock several times within the same day. I imagine similar logic could apply to both.

For example, if you bought a 1,000 shares of a stock and some time later your trading system says it is a good time to take or lock in some profits. Do you sell off 1/4 (250 shares), 1/2 (500shares) of the original position? Some other percentage? With the overall intent being to letting the rest of the shares continue the trend run. Just locking in some profits for the time being. As the saying goes - Can never go broke taking profits.

Likewise, when your system strategy says this is a pullback and a good spot to add to your position. How many extra shares do you buy, 1/4 (250 shares), 1/2 (500 shares) compared to your original position size?


To be clear I am not asking about percentage of total account size. Only the size of the initial allotment of stock you chose to buy. Also not asking about Averaging In or Out of a position which is something different. Where for example if one wanted 600 shares of a stock near $30 they would buy 200 shares at $30, 200 shares at $31 and another 200 shares at $32.

Thanks for your insight.

Cheers,
Rick

 

[RickAns]

Found a close enough guide to what I was seeking from TraderLion. Maybe this will help someone else.

Our rules at TraderLion are quite simple:

For swing trades:
Sell 1/3 of initial position if 5% profit is hit the same day
Sell 1/2 of initial position if 5% profit is hit any day after the initial buy.

For position trades:
Sell 1/3 of initial position if 10% profit is hit, no matter the day.