Quitting a session while green: harder than it sounds

[Shadow Trader]

After a good start, the sensible move is often to stop. Yet many traders carry on, and give back the profit.

Several forces are at work. A sense that the market is cooperating and more should be taken. A fear of missing the next good setup. And a feeling that stopping early wastes the day.

The cost shows up in the daily results. A profitable morning followed by a few careless afternoon trades turns a good day into an average one.

Some traders set a daily profit target and stop when reached. Others use a trailing rule, such as stopping if the day's profit falls by a third from its peak. Both create a clear exit.

The right rule depends on the strategy, since some work best in streaks and others do not. But the journal can reveal whether trades after reaching a certain profit tend to add or subtract.

What rule, if any, do you use to decide that a green day is finished?