‘Letting profits run’ is what exactly?

So if you’ve read anything at all about spread betting you’ll likely have seen the following quote: –

Cut your losses short and let your profits run

Great, but what does it actually mean? Yea, I know what it means but what does it actually mean I have to do? The answer hit me right in the head today…

Letting your profits run = DELAYED gratification

Now, delayed gratification is used in psychology to characterise whether a person is able to resist the temptation to take the chocolate right now right away or will wait for a bigger piece of chocolate they’ve been told might arrive but can’t yet see.

Delayed gratification is the ability to resist temptation now on the promise of a bigger gain in the future. This is pretty simple to understand looking at a price chart. For anyone like me (beginning spread trading) there’s an overwhelming temptation to grab the profits as soon as they appear simply because actual profits have been few and far between up till this point 😉

Taking what’s there rather than waiting for a bigger payday while the price dances about is very difficult to resist. So… what to do?

I read recently that the development of will-power is like the development of any system. You need to practice it in order for your ‘delayed gratification muscle’ to develop. You will get better at not grabbing the cash early by practising delayed gratification. So I will be doing this with my somewhat atrocious diet.

At one point I was pretty good at this but recently I’m eating a whole load of crap like chocolate, crisps and more chocolate. So it’s a win/win. I’ll be delaying gratification till the weekends, not gaining weight, improving my diet and my trading at the same time – Huzzah!

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