What is a “runner”?
After you are profitable in a position, many successful short-term traders will book profits on ½ their initial trade and leave the other half to run (runner). Some people call this “scalping”, which means taking small profits in the short-term. Leaving a runner and scalping are essential in reducing overall risk in trading. When you take ½ your position off, you lower your stop to break even on the remainder of the trade to ensure the overall trade is profitable. If you take a scalp early and trail the rest with a stop at your cost, you are now in a trade you can’t lose (intra-day). However, if you hold that runner overnight you do have risk of losing money in the overall trade. There are occasions where stocks will gap down below your stop, on overnight market news. This is not the norm, but does happen and is part of trading.
When I take scalps, I will often book ¾ of my trade early and my risk is now considerably reduced. In addition, I am more comfortable holding my runner overnight. Options are a way of leveraging a trade and capitalizing on smaller price movements in stocks, but also have more risk. The key to a successful trading strategy and methodology is risk management. If you can reduce risk fast while keeping a runner, your odds of succeeding increase significantly.