One of the characteristics of a trade that loses money
is that the trader often feels hat he/she made a
mistake. It is a misconception. A trade should be
defined as 'good' when the rationale behind the trade is
valid, not when the trade earns a profit. If
risk/reward was within your comfort zone, if your
analysis of the stock was accurate, and if the trade was
sized properly, there's not much more you can do.
We must accept the fact that we gather information and
make the best decision that we can make. then it is out
of your hands. The market does not always cooperate,
and we must accept the fact that losses occur. All by
itself, the fact that money was lost, does not mean
anyone made a mistake.
Along with the concept of losing money, most traders
feel a 'need' to get back to even. They hold onto
positions that are no longer right for them to own - and
that is a mistake
. It's okay to take a loss.
It's a good idea to get out of a trade when your reason
for making the trade is no longer valid. Perhaps a
recent earnings report demonstrates that the company's
future growth is not going to meet your expectations.
if that's the case, it makes little sense to own the
stock when the very reason you bought it is no longer
Please learn to think in terms of investing in positions
with the intention of making money going forward. If a
current position does not meet your expectations, don't
wait to get back to even to sell it. Sell it now and
find a more suitable investment for your money.
Mark D Wolfinger
Expiring Monthly: The Option Traders Journal