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when to take profits trading ETFs
I just trade ETFs and currently take profits when I get stopped out or if the indicators I use deteriorate . If I have a profit between 2 and 3% I place my stop loss at the purchase price; for profits between 3 & 5% the slop loss is placed to preserve 50% of the gain; for profits between 5 & 10 % the stop loss is placed to preserve 75% of the gain; for profits between 10 & 15% the stop loss is placed to preserve 80% of the gain; for profits above 15% the stop loss is placed 2% below the close and only moved higher, not lower.
I am noticing that in my successful trades the price usually advances 5% within the first month after purchasing the trade. After that it can continue to rise, it can fall or it can move horizontally. My question is if you can capture a 5% gain within one month of purchasing a trade with a sell limit order that is placed once the trade closes 4% above the original purchase price would you be better off in selling the trade, assuming there are other potential good ETF trade candidates to reinvest in, or holding on to it longer hoping for a further increase? I wonder if any statistical analysis studies of this have been done and what are the percentage odds that an ETF trade once it reaches a 5% gain over one month will continue to advance, and over what time period you need to hold it to get a further significant advance in price.
So are you better off taking a 5% gain in one month trading ETFs and reinvesting the money in another good ETF trading candidate, or holding on to the trade longer hoping for a higher percentage gain?