Tuesday 24 September 2013

Cut Losers, Maximize Winners

So in my previous post Click Here to read it I talked about how in trading you don't have to worry about losers, you can choose how much you want to lose so it is totally in your control. The main goal is to manage your winning trades to ensure you PULL out nasty amounts of GAINS! Conclusion of today, look for RISK/REWARD and get an understanding of how much room you need to make money in your trades. Exmaple: Look for tight stops! See if the stock will allow you maximize gains!

Today is a great example:

Total R: +2.31R

Winners:

Trade 1: $AMAT + .59R Winner

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Trade 2: $NTAP +1.92R Winner
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Losers:

 $DISH -.17R Loser

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I had another very small loser, it was only -.04R

Key to Success: Cut Losers, Maximize winners and honestly review each stock and ask yourself "it this stock worth my money?" "will it pay me out good or am I just forcing it?" If you feel like you are forcing then just don't take it, its not worth your money or your time.

Below is Profit / Loss for Today. +2.31R 

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1 comment:

  1. Anonymous24 September 2013 at 20:32

    Epic day today man! 2.4R's is cray for a Tuesday so far up 1.4R's for the week and still 3 trading days remaining. Awesome!

    What i noticed from the trades today that i haven't realized before is the in depth reward to risk in a given trade. To elaborate, when you short a stock like today's NTAP you want to make sure your giving your trade enough breathing room. How do you do this, by ensuring your stop is minimal and your first exit is at least twice as large as the stop amount.

    Now what I did not take into account before is the 50% mark on the gap up candle. If you look at NTAP trade the 50% mark is at $42.57 (you covered here good). On the DISH trade its at $45.95.

    Now look at the stop amounts for each trade. Ex. NTAP is a 0.12 cent stop and DISH is a 0.15 cent stop.

    putting this all together.
    NTAP short @ $42.89 gives it a 0.32 cents breathing room until it reaches the 50% mark, which equates about 2.7 times the stop amount of 0.12 cents.

    Example 2. DISH short @ $46.18 gives it a 0.23 cents breathing room which is only 1.5 times the stop amount of 0.15 cents.

    Your breathing room needs to be sufficient enough for optimal growth. An amount of atleast twice as much as the stop amount would be ideal if not more. Also tight stops play a big role just waiting for a good play if the play doesn't equate high chance it will not follow through.

    Just a theory.

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