“Exit-it is” is an affliction suffered by many traders. It is a condition caused by exiting a trade too early or while the trade is still making a profit. The opposite of “exit-itis” is called “greed.” Greed is the malady of many traders (including myself who finally found the cure).
I have a good friend in New Jersey (a better trader than me and also a member of useThinkScript). We frequently discuss our trades and lament the times we leave money on the table. There are many times, however, when we should have exited before the “big boys” pulled the rug out from under us (a favorite tactic of the “big boys”). We have also come to an important conclusion which should be your thought for the day: "A TRADER NEVER LOSES MONEY WHEN THEY TAKE A PROFIT"!
So, what is a fair profit?
To my way of thinking “a fair profit” is any profit that pays a better return on my money risked than what my bank pays for a similar deposit. As traders we are actually investing our cash in a trade and, as such, need to make an adequate return on our investment (or on all trades overall).
I can assure you that the 90% of options traders who lose money are plagued with the greed malady and/or are not using good indicators, or rationale, for placing their trades. As in life many individuals want more and place trades thinking they know what the market has in mind (I usually lose when I think I know what the market is going to do).
What is the cure for these afflictions?
There are many traders who place a trade and then automatically place a GTC (Good Until Cancelled) order for 11% (a 10% profit after costs) more than what they paid for the trade. These traders are very effective in receiving a 10% return on their money. Others use 15%, 20% or maybe like me, usually 24%.
Why do I like GTC orders? Look at the shadows (wicks) on a candle and see how often they momentarily pop up or down. A lot of profits lie in those shadows just waiting to be collected. Once that shadow pops up/down I am not usually fast enough to grab the amount my GTC collected for me, and that shadow may be a turning point for the stock (ETF).
Of the two afflictions “exit-it is” tends to be more profitable in the long run than does the malady of “greed”?
I have a good friend in New Jersey (a better trader than me and also a member of useThinkScript). We frequently discuss our trades and lament the times we leave money on the table. There are many times, however, when we should have exited before the “big boys” pulled the rug out from under us (a favorite tactic of the “big boys”). We have also come to an important conclusion which should be your thought for the day: "A TRADER NEVER LOSES MONEY WHEN THEY TAKE A PROFIT"!
So, what is a fair profit?
To my way of thinking “a fair profit” is any profit that pays a better return on my money risked than what my bank pays for a similar deposit. As traders we are actually investing our cash in a trade and, as such, need to make an adequate return on our investment (or on all trades overall).
I can assure you that the 90% of options traders who lose money are plagued with the greed malady and/or are not using good indicators, or rationale, for placing their trades. As in life many individuals want more and place trades thinking they know what the market has in mind (I usually lose when I think I know what the market is going to do).
What is the cure for these afflictions?
There are many traders who place a trade and then automatically place a GTC (Good Until Cancelled) order for 11% (a 10% profit after costs) more than what they paid for the trade. These traders are very effective in receiving a 10% return on their money. Others use 15%, 20% or maybe like me, usually 24%.
Why do I like GTC orders? Look at the shadows (wicks) on a candle and see how often they momentarily pop up or down. A lot of profits lie in those shadows just waiting to be collected. Once that shadow pops up/down I am not usually fast enough to grab the amount my GTC collected for me, and that shadow may be a turning point for the stock (ETF).
Of the two afflictions “exit-it is” tends to be more profitable in the long run than does the malady of “greed”?
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