My trading plan:
Invest 10% of capital on any one stock
Stop loss of 20%
Target 50% profit level
So I enter a trade and buy 1000 XYZ shares at $1.00. This represents $1,000 of my $10K capital. I also set a stop loss of 20% meaning that i set to close out the trade if it hits $0.80. I will also realise my profits when it hits $1.50.
Ok, so XYZ goes up to $1.10.. i'm now sitting on an unrealised profit of 10%. What do I do now? Should I set a stop at $0.90 or $1.00 or do nothing. What if it dips below $1.00 again, I just turned a profitable trade into a losing one.
What happens when XYZ gets to $1.49 - 1c short of my target, then it tanks? Is there a strategy or trading plan to protect my unrealised profits?
What if it hits $1.50, should I close out - as per my trading plan - or let a 'winning trade run' and risk the fact it could go belwo $1.50 again?