The Adjustment

Taking a loss is straightforward—we simply follow our stop loss. The real challenge—and greatest potential for regret—lies in managing profitable positions, particularly when a stock has made big moves in a short period.

This is particularly common in magnitude trades like an EP or IPO where our objective is to hold for a longer duration and sell into weakness, but often have moments when the stock is overextended in the short term with a high probability of pulling back. However, we hesitate to sell either because it conflicts with our original trade objective or because we fear missing the chance to buy back during the pullback.

This is where many professional traders actively manage their core positions. Rather than passively waiting for a deeper trailing stop loss to trigger during weakness, they sell a portion when the price becomes extended and buy back the same amount at a lower price. This strategy proves more effective than enduring drawdowns while waiting for a formal pullback setup at support levels or moving averages.

Let's take a recent example of IGIL (5 min chart) -