Definition – What does Let Your Profits Run mean?
Let your profits run is one half of the forex trading idiom “cut your losses, let your profits run.” It touches on the tendency of currency traders to sell winning positions too quickly while holding losing position too long. This is because traders overestimate the risk of their gains reversing while also overestimating the chances of a losing position turning around. To let your profits run, you have to be confident in your trading strategy.
ForexTerms explains Let Your Profits Run
This strategy is important for traders. By cutting losing investments before they have a chance to compound and riding the gainers despite the risk of a reversal, traders can increase their profits while minimizing their losses. A trading plan is usually a formalized cut your losses, let your profits run with rules that spell out what an acceptable loss is and what profit is being targeted.