Protecting the Downside in Trading
This week’s Free Newsletter over at TheStockBandit.com discusses the topic of Protecting the Downside in Trading.
Every one of us are at times driven by the big emotions that trading the markets inevitably brings, but if we do our job and protect the downside first, the other things will take care of themselves.
When I was first starting to trade, I would always look at how much I could make on a trade. It didn’t take long to realize I needed a good exit plan, so my mentality shifted. Now I start every trade with a look at the potential for downside, and I structure my trades accordingly. So for my thoughts on the subject, stop by and check out the Free Newsletter at TheStockBandit.com.
By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com and we’ll notify you every time one is published. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Vicente | May 1, 2007 | Reply
I think that the applications of derivatives in the form of options is a venue that should be greatly explored when it comes to protecting your capital from a down side in any trade that will involve more than a single day. Protective puts, married puts, and collars offer good protection.
TheStockBandit | May 1, 2007 | Reply
When it comes to hedging, you are exactly right Vicente. However, I am mostly referring to just the discipline needed to cut a trade when it is time. Most inexperienced traders fail to set a “get-out” point, but if they would do that then they’d see much better results.
Jeff