Exploiting Your Trading Edge

Sitting on your hands is sometimes best. Like the Red Sox should have done with John Farrell.

Only trade when you have an edge. Casinos in Vegas never close because they "never" don't have the edge (in most games).

Exiting Winners can be a hard trade. You don’t want to get out too early, and you don’t want to overstay your visit so to speak.

In order to make the most money and have total sanity around winners because you’ll be executing the same trade effectively for each winner you have. That leads to consistent behavior. Consistent behavior in trading leads to consistent and profitable trading.

No second guessing yourself.

Sometimes you’ll get knocked out.

Sometimes you’ll get to stay in the trade and it will continue to grow.

Don’t isolate your trading to fret about one winning trade. Think in terms of how you’ll be in this situation 1,000 times in your career and now you’ll have a plan to handling exits with your winners.

The LAST place you want to be is to have to make decisions around handling winners each time you find yourself in a winner. That’s emotionally exhausting.

Know what you’re going to do BEFOREHAND and follow those rules.

Here are three potential techniques to exit winning trades:

1. Sell an “N-Day Low” for your Longs where N is the number of days in your look-back. N can be 5 days, 10 days…you get to set it.
2. You can wait for the shorter term moving average to cross below the longer to generate a sell signal. For example, when the 5-Day crosses below the 20-Day moving average, you sell your long.
3. Employ a “time stop” where if the security does not resume its uptrend in “N days,” you sell.

Learn about yourself and become the best trader you can be.

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