In this business of trading you will often find yourself on the wrong side of a trade, knowing this, it is important to cut your losses as soon as possible.
Yesterday I entered two positions, (which I had posted on my website TradersChoice.net), Puts on HD and ORCL.
Today in early trade the price action of both HD and ORCL left me with a few choices as their price action was higher, not lower. Now keeping in mind that you will almost never get in, or out for that matter, of a particular asset at the absolute best price, you should expect that the price action will "wiggle around" a bit.
Being that the price action of both HD and ORCL both was higher, I looked at the movement of the overall market which was also higher, so I had a few decisions to make.
- Hold the positions and observe their price action.
- Hedge the positions.
- Open straddles on the positions.
- Close the positions with a minimal loss.
Each of the choices above were all viable.
I chose 4,. close the positions with a minimal loss.
Losses are an integral part of the business of trading and there is no way out of it however, knowing this, cutting those losses early on will make you a winner in the long run.
Trading is, like anything else, all about the long run. Keeping losses to a minimum, (and riding your winners), is critical to becoming a successful trader.
There are many, many ways to play your positions after you open them, and I outlined four of these in the choices I listed above. Proper money management is key to the long term success of any trader.
To learn more about money management, download my 100% totally FREE brief titled:
"The One Rule You Must Never Break When Trading Stocks." Click here: http://www.lulu.com/shop/gregory-mannarino/the-one-rule-you-must-never-break-when-trading-stocks/ebook/product-23095047.html
Gregory Mannarino
Thank you Greg!
Didn't Kenny rogers sing about the same thing, sorry about that couldn't help it . Cheers mike
Great advice. You've guidance really lessens the learning curve for the beginning/novice trader. I had to learn the hard way through many years of experience to get a good feel for it, but your picks are dead on and make the whole process much easier. I'm primarily a long term investor now, but still am active b/c of your stock picks you provide. I really appreciate all you do!
Amen to that Greg. Too bad it's easier said than done! RESTEEMED :]
When it come to trading stock I like opening short put instead of open buy spot. If the price go up I can profit from premium but if it go down then I can buy back the stock at a lower price.
THAT WAS SOUND ADVICE
I do not trade stocks, anymore, but always look forward, to your , "be your own central banker" and physical silver, advice.
You get zero points for being "right", the market does not care if you are "right". You only either make money or lose money. The biggest losses come when you hold a losing position because you know you are "right". Trades are like a bus, there will be another one coming along soon, make sure you have the fare to ride the next one.
Great analogy !!
Great lesson and words of wisdom. Thanks so much!
Tough to take those losses, no matter how small. Leading by example - well done G.
I don't do much stock trading but this was really useful and interesting.
Thank you Greg!
Your information is always so useful and valuable!
Your lions thank you Greg!
I always tell people trading is like gambling. It's very important to know when to hold and when to fold! Holding when you have to fold is just as bad as folding when you have to hold! Thanks a lot for this. Very well-written and useful... Following...
Thanks Greg.
Nice article you are Absolutely right sir loss is the part of the business and in trading to close the positions with minimal loss is also very important.
some great points to consider :)
Thanks Greg
Thank you very much for sharing your experience with us for free. Resteeming!
Great article Greg. It deserves an standing ovation. I can't tell you how much money I would have saved if I hadn't done the exact opposite of this!
I think I will pick choice 1 for gold and silver =)
Brilliant post Mr. Mannarino! Upvoted & RESTEEMED :)
Wow, smart move and awesome advice! Thank you
Brilliant post Greg. You got an upvote and a resteem from me ;)
You're doing great Greg. Ipkiss approves! 👍👍🏼👍👍
Yes, you have to cut losses as much as you can.
Thanks for sharing. May your winners dwarf your losers!!!
Things i learned from Greg Mannarino's books ........
phenomenal advice! I appreciate your wisdom Greg!
Greg of the 4 choices which one do you use the must?
Depends honestly.
Hi @marketreport I've written an article about you, check it out if you can.
22 Best Steemit Bloggers Of The Week To Follow July 2017
https://steemit.com/steemit/@jzeek/22-best-steemit-bloggers-of-the-week-to-follow-july-2017
You make it look easy but I know it's not !!!
actually it really is. If you apply KISS and use the buy low, sell high method, compiled with a lot of patience.. You'll do just fine. If you have any questions feel free to ask :)
Trade Well.
Thanks for another great post Greg.
Keep em coming please.
Nothing better than scratching a trade and knowing you probably saved yourself from a bigger loss!
You make it look easy but I know it's not.
The poker analogy and mindset is very helpful. Thank you.
It is not always about maximizing gains. There are times when it is difficult to make gains so the alternative would be to limit the losses. It is a dual problem: maximize gains and limit losses.
I think as traders, we must not forget the key rule: keep your emotions out of your trades. Emotions and investments don't mix very well. Pretty much just leads to regretful buys and sells. Speaking from experience :'(
Hi Greg,
I'm not a trader....maybe someday when it's not all out of WACK. Until then I'll just STACK!
Thanks for your insights into trading though, Keep up the GREAT job brother!! :C)
I am a trader as well and can tell you that the market never plays out how you want it to, but you could def. have an idea @maerketreport thanks for sharing!
@marketreport like with anything you can't win all the time, playing smart is the key.
This is an excellent article. Getting in on the wrong side of a trade was the most challenging aspect of trading to me when I initially started. It is an issue that cannot be completely avoided and managing poor trades is somewhat of an art. Your perspective as to how these poor trades should be managed is key to exiting with minimal losses or even exiting unscathed.
So how and where do I buy sell and trade in the market? Like a broker or the walmart or what?
Just clownin ya but still where would you recomend I go to trade?
Thank you for update
Nice input Greg, you have never sàid it any better.
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Yep, it's far easier to KEEP a dollar to EARN one! Thanks for the post