Managing Trades That Don’t Move As Expected

Hey gang, welcome back! The markets not going to be closed, so I am not going to be able to give you my thoughts at that point. Currently we are still in an 8 day consolidation on the U.S. stock index futures. Still looking for a break out break down still monitoring the VIX closely. Other than that, key point from this morning is trade management. Typically what happens is I go ahead and like to take a trade and like to see it work right away, trail behind it and let it run till whenever the profit takes me out, great!

Well what happens when you get into a trade and then the reason you go into the trade is no longer there, and the market is not continuing to go the way you were hope it was going to go. People got to learn this lesson here in the live trading room this morning, where I went ahead and took a trade and the market did not continue to go down. What I did was scratched the trade. That is something that is so hard for so many of us to do. Just walk away from the trade, be break even.

What does it matter even if you break even and you lose a few bucks in commissions? Even if you lose a few bucks and you lose a few bucks in commissions? What is the difference? The key is that if you can do something like that. You are letting your winners run and scratching your trades that are not. That is a phenomenal equity curve. That equals a really nice equity curve, that is what I have this year is a really nice equity curve. But if you go ahead otherwise, if you make a little bit of money then lose a lot, you make a little bit you lose a lot. Or if you make a little lose a little, make a little lose a little you still end up losing the game there when you end up scratched because you have your data fees, your charts, any other expenses you have is part of this.

The point I am making with all of this is, this has got to be a key focus in all of our trading, whether we are day traders, swing traders, for that matter long term investors, if the reason we take the trade is no longer there. We have got to get out. This has been one of the secrets to my success that has led to this fantastic equity curve here, 2016 has just been phenomenal for this. This is the strategy that I am using. People got to actually see it in action in rare form here this morning. Where we just scratched the trade. You know what this just didn’t work the way I didn’t want it to. We had a situation where we call mom and dad are fighting, when the daily and the hourly charts go in the opposite way that leads to a lot of volatility. We were looking to see if we could get a continuation. Didn’t continue, went ahead and stalled out. The reason that I got into the trade went ahead and changed. Rather than go ahead and take some sort of lose, went ahead and just scratched the trade. And that is what helps lead to this kind of equity curve, make money scratch, money scratch, and that is a phenomenal equity curve. With that being said gang, you need to go ahead and understand that. Make some lose some is still a losing proposition because we still have the expenses associated with trading and so on and so forth.

Key thing I want you to reflect on and focus on. Ask yourself in your trading plan are you making some than scratching? Or are you making some losing some? Are your winners bigger than your losers? Do you have well defined stop loss parameters? If you don’t, contact me let’s go ahead and see what we can do to help you with this process. That is a key thought I wanted to share with you this weekend. You guys have a wonderful weekend. I look forward to seeing you Monday morning in the live trading room or for everyone else Monday evening in the videos.

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