Taking Money Off The Table

You may remember that in my last article I started to explore the issue of taking money off the table periodically (as a full-time day trader might, to pay the bills) vs. keeping profits on the table (as an traditional investor might, so as to compound his gains).

Yesterday it occurred to me that I might take some money off the table from two Ocado positions that were present in one of my trading accounts. My two £1-per-point positions were showing profits of £48 and £23 respectively, because I had pyramided my original more profitable position somewhere along the line.

It raises the question of whether in this situation to take the more profitable or less profitable position off the table, and it could make a difference which one I choose. From a reporting point of view it would make more sense to retain the more profitable position so that my portfolio snapshot looks better; but I’m not reporting this particular account in the way that I am reporting my trading trail account, so I have no one to impress. From a trading perspective, cashing in the more profitable position might (but might not, it depends on the platform) help me return more cash to my trading funds that will help me establish yet more positions in the future.

You know what? From a future profitability perspective it makes not one jot of difference which position I close, because taking £1-per-point off the table while leaving £1-per-point to ride is exactly the same whichever way round I do it. So I’ll take the higher cash.

Tony Loton is a private trader, and author of the book “Position Trading” (Second Edition) published by LOTONtech.