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Sitting Tight: One Of The Important Lessons From Jesse Livermore

One of the hardest things to do in trading but one of the most important is holding onto winning trades. In order to mathematically be a profitable trader big winning trades must overwhelm small losing trades. Minimizing losing trades is the most important aspect of trading but a close second is maximizing winning trades.

From a Stage Analysis perspective, this takes the form of holding onto trades once they break out of a Stage 1 base and move into a Stage 2 advance. As long as the trade trends above the 30-week moving average the most important thing to do is hold on and let the trade grow.

Now one thing that I do believe in is taking partial profits along the way to add liquidity to your account. Without a cash position in your account you can’t take advantage of future trading opportunities, and the only way to increase cash is to take some profits. I like to sell when a market is stretched above the 30-week moving average and take some chips off the table.

Here’s some of the things Jesse Livermore said about sitting tight in big trades:

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