Thursday, May 5, 2011

Respect Stop Losses!

Hey guys,

I wanted to touch on a VERY important subject tonight. When in a losing trade, it's very easy to get 'blind' and decide to not place a stop loss on a trade in the hopes it'll 'come back'. Look, i don't believe in these kinds of games. Some stocks NEVER come back. Been doing this way too long to believe in this. When you enter any trade, whether it be mine, yours or anyone else's, you must know in advance what is your risk tolerance on any particular trade. What are you willing to lose if a trade stops out completely.

Taking losses or eating a stop loss is part of this game. Gotta be able to stomach that and roll with it. Contain the bad trades quickly and once the winning trades start hitting again, you will so glad you respected the stop losses to prevent one or two bad trades from getting out of control. This is what experienced traders do and know!

RESPECT YOUR STOP LOSSES. You'll win some and you'll lose some but i am confident in the long run, if you keep to this habit, you'll come out ahead.

Ingrain this in your head till it becomes second nature.

2 comments:

PhoenixTrader said...

Stewie,
Any comments on DEE, AGA?
These may be major trend changes.

Stewie said...

HI PT>

Imho, this extreme move we saw in many commodity areas is reason for caution. In my book, this is NOT something to brush off and take lightly. This POSSIBLE trend change COULD be an early sign that we could looking at a deeper correction in commodities.

What i tell people is it's still too early to jump to conclusions. Have play things in a defensive manner now until we get a better picture of what is really going on.

hope this makes sense

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