nikoschopen
2,824 posts
msg #59240
- Ignore nikoschopen |
1/22/2008 12:49:06 PM
I hope the title of this thread won't rub anyone up the wrong way. Of course, we all intuitively know when we should have or could have take our profit in hindsight, let alone would have had we given another chance. But I believe this is a very important subject matter that's requires another regurgitation. It ain't what you can make but what you must retain in order to survive, if not trade, for another day. The moral is that you should keep a tight lid on ure losses, namely, don't let a small loss turn into a gargantuan loser. Above all, keep ure cool. It's even okay to give back all ure profit, as I'm prone to compulsively repeat time after time. But when it breaks below ure entry point, you shouldn't hesitate to pull the trigger. Not only will this save you from potential losses, but it will keep you from becoming demoralized. Needless for me to point out that you can't think straight when ure neck deep in losses.Once you know when to cut ure losses,
the profit will take care of itself... |
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maxreturn
745 posts
msg #59242
- Ignore maxreturn
modified |
1/22/2008 1:53:08 PM
Yes Niko. As of Friday's close I was long a put option on BSC and was up over 35%. We all knew the market would likely gap open to the downside today and then the fed makes their announcement. So I planned on exiting my position on the open if this scenario played out, which it did. Had I followed my plan I would have been up over 100% on this play, which lasted only 3-4 days. Instead, I decided to sit and watch the price action intraday, knowing that the stock would likely rally, but hoping for a short setup on the 5 minute bars within the first 15 minutes or so to stay in the position. It only took two 5 minute bars before it became evident there was HUGE buying power in this stock so I exited at the market. I still made over 60% so I'm not crying. But your point is well taken. Have a plan before the market opens the next day and FOLLOW IT!
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nikoschopen
2,824 posts
msg #59243
- Ignore nikoschopen |
1/22/2008 2:14:34 PM
Max, Well done. As you may already know, a loss is part of business. It's simply unavoidable. Even the best traders take a hit once in a while. However, what distinguish them from the average joe-sixpack is that they take a controlled risk that maximizes the return and minimizes the loss. I reiterate that this game is all about risk and reward, and how you control the former while leveraging the latter to ure advantage.
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