DAY 36: Mental blocks when expanding profits

By DAY 35, you will have finished Week 5 of “verification, verification, and more verification,” and this timeWeek 6: Mental Strengthening Month begins.
First, as DAY 36, focus on the **“mental blocks that occur when profits are growing.” Entry and stop loss are important as well, but the real issue is“the inability to let profits ride.” This is a common problem among many traders. Even when in the positive, they tend to take profits too soon, so-called“chicken take-profits.”** We will share the mindset and measures to overcome it.

1. Why can’t we extend profits?

1. Fear (fear that unrealized profits will vanish)

   • When profits appear, the thought often arises, “If I wait longer, I might lose more.”
   • The fear of turning a gain into zero makes you want to take profits early.

2. Traumatic past experiences

   • If you once held unrealized profits too long and the market suddenly reversed into a loss, you think, “I don’t want to repeat that mistake.”
   • This can accelerate chicken take-profit behavior.

3. No clear take-profit rules

   • If there is no clear basis for “how far to let it run,” you want to take profits as soon as a little unrealized profit appears.
   • Unclear profit targets or trailing stop settings can lead to being whipped around by market swings.

4. After a losing streak

   • If profits appear after a string of losses, the psychology of “I must secure the profits no matter what” strengthens.
   • You may take profits earlier than your original rules, causing you to miss larger trends.

2. Problems caused by chicken take-profits

1. Risk-reward ratio tends to deteriorate

   • The stop-loss width remains fixed, but you shrink your take-profit width too much, making you more likely to lose overall.
   • For example, with a 20-pip stop and 10-pip take-profit, even with a reasonable win rate, the expected value can become negative.

2. Missed large trends

   • You cut profits during a large upward (or downward) move, leaving with the feeling of “I can’t recover.”
   • Even if you increase trades slowly, you’re prone to erasing gains with one big loss.

3. Unable to capitalize on market growth

   • “Extending profits” is the essence of trend following.
   • If chicken take-profits become habitual, in the long runit’s hard to build large profits even with a high win rate.

3. Mental strategies to extend profits

(1) Decide the take-profit target first

• Set concrete numbers or lines in advance：
  • Example: up to Fibonacci expansion 161.8%, or beyond the recent high/low—set grounds for action.
• Protective mindset：
  • If unrealized profits exist but you believe you haven’t reached the target yet, it is easier to suppress the impulse to take profits early.

(2) Create psychological room with partial profits

• Take partial profits first：
  • For example, take half early and let the rest ride with a trailing stop.
  • That reduces the risk of unrealized profits turning to zero and provides emotional stability.
• Success example：
  • When profit reaches +10 pips, close half and let the remainder run. Move the stop loss to break-even to eliminate risk, making it even easier.

(3) Gain peace of mind with “break-even stops” or “trailing stops”

• Break-even stop：
  • Once unrealized profits have risen to a certain level, move the stop loss to the entry price to avoid losses.
  • If you feel you won’t lose anymore, the mental hurdle to let profits ride decreases.
• Trailing stop：
  • As price advances, gradually adjust the stop loss upward (or downward) accordingly.
  • While the market is favorable, you hold; when it reverses, you are automatically taken out, which helps those who aren’t good at “pulling.”

(4) Maintain a big-picture view

• Check higher timeframes and market conditions：
  • If you can determine on daily or 4-hour charts that the trend is still continuing, you won’t rush to take profits during small short-term pullbacks.
  • You develop a mindset that isn’t swayed by minor noise in the middle of a larger wave.

4. Strategic approaches to extending profits

1. Set multiple take-profit points

   • Example: first take-profit at +30 pips, second at +60 pips, third at +100 pips.
   • This distributes the risk of cutting profits prematurely.

2. In trending markets, stack on “buying dips”/“selling rallies”

   • Even after an initial take-profit, if another pullback (reversal) comes, add entries to build positions.
   • If you maintain a certain stop-loss level, you can obtain multiple profit ranges while the trend continues.

3. Mental rule: decide to hold for at least ○○ pips

   • Set personal rules like “I won’t take profits until at least +20 pips.”
   • There will be deceits and reversals, but it reduces chicken profits like taking profits at 1–2 pips instantly.

5. Practical examples of overcoming chicken profits

(1) Case A: partial take-profit + break-even stop

• Background: Once profits reach +10 pips, I couldn’t tolerate and would take profits.
• Measures：
  • Adopt a rule of “take half at +10 pips and move the stop to break-even; trail the rest.”
• Result：
  • Small profits are secured, and when a larger trend emerges, the remaining position can earn much more, improving overall P/L.

(2) Case B: continue holding based on MA slope on higher timeframes

• Background: On a 5-minute chart, I would take profits fearfully as the price dipped slightly.
• Measures：
  • If the MA on the higher timeframe (1-hour) is upward, hold the position. Adopt a rule not to close on minor noises on the 5-minute chart.
• Result：
  • Since the higher timeframe still shows an uptrend, there is psychological justification to hold, enabling you to ride the trend to the end..

(3) Case C: mental practice using demo and small lots to hold

• Background: In a real account, unrealized profits tempt me to close.
• Measures：
  • Use a demo account or small lots to conduct “profit extension experiments,” and create a situation where a few consecutive losses don’t affect you.
  • Experience tens of instances feeling, “When you hold, this happens,” and accumulate success when you don’t miss opportunities to extend profits.
• Result：
  • No major losses, even after losing streaks; calmer to continue. As you get used to it, gradually increase lot size, reducing psychological burden in real trades.

6. Summary & next preview

Summary

1. Causes of chicken profits：Fear of the unrealized profits disappearing, past trauma, lack of clear take-profit rules, and anxiety after losses.
2. Disadvantages：Worsens risk-reward, may miss big trends, cannot fully leverage technical advantages.
3. Overcoming measures：
   • Set clear take-profit targets in advance, partial profits + break-even stops, check the big picture on higher timeframes, and practice “pulling” with demos and small lots.
   • Develop the mindset to hold as long as the trend continues by setting and sticking to grounded rules.
4. Examples：Gaining confidence by taking partial profits, pulling based on higher-timeframe justification, and practicing pulling in a simulated environment to improve profit-extension skills.

Next session (DAY 37) theme: Mental care when you have losses

• After solving the profit extension issues, the focus shifts to mental care for losses.
• When you lose big or have a losing streak, the urge to “make back the loss” can create a vicious cycle that leads to further losses.
• Tomorrow, we’ll examine in detail “how to mental-care when facing losses.” Stay tuned!

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https://www.gogojungle.co.jp/users/147322/products

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