Greed is very difficult to overcome. It's hard to know exactly when/where to take a profit, isn't it? I mean, we can stay with bullish trades for a very long time, so long as the conditions remain favorable to the bulls. But how many times have you had a nice gain, felt like you should (or are entitled) to gain more, and all a sudden it's lost into the sea of no return?
Making money in markets is a challenge each day, but we try our best to make it work. We are often faced with tough decisions to make regarding our positions. Let's say you make a great call on an options play, Roku Inc (NASDAQ:ROKU) recently sold off hard but rallied smartly on a nice earnings beat. You bought a call option prior.
Now, the options are expensive but you are sitting on a solid 30% winner. Maybe your goal was to make 50%, and you talk yourself into holding longer, always knowing the option is decaying until expiration. You're going to get to your 50% goal regardless because the market is wrong and you're right (sarcasm). but maybe the market won't give in to your wants here. In days, you might find yourself in the hole and sporting a loss of 20%, a huge turn. One of those 4 fears of trading is the 'fear of letting a winner turn into a loss'.
There isn't really a secret sauce/recipe to taking profits and booking gains. But we often find ourselves wondering why we do things wrong. The reason is we abandon the discipline required to keep building our trading accounts. Some will say compounding gets it done better but I say no, it's about discipline and structure. The market is not a feeding machine, handing out winning lottery tickets on a daily basis. On the contrary, the market gods will taketh away from the greediest of them all. Don't be one of them.
Bottom line: have a solid system of ringing the cash register at all times. Most of all, be humble and respect the market moves. Our job is to book gains/reduce risk and THEN find the next trade idea. Rinse, wash and repeat. If you lose capital because of your greed, you might not be able to find the next big trading opportunity.