You will have losses, you have had losses. It’s part of the game. But, how do you deal with it? Were you prepared for them? Did you size your trades right? Did you blow out your account? Any great trader with a bullet-proof system can be a total disaster if they don’t deploy disciplined risk management techniques. I’ve seen traders completely shattered and psychologically devastated over losses. Gotta deal with it.
See a trade that you just know is going to be a winner? Not just A winner…a monster. Lickin’ your chops just counting up the cash that is going to roll in. Probably looking at that next huge trade after this one is over because it is a slam dunk – or so you thought. Like you, I have been there. It’s very hard to keep the emotions in check when you have real money on the line. But when presented with a chance to take profits – not matter how small or large – you take them and never look back. I will never apologize for taking a gain no matter the size. Likewise, I will never be ‘too upset’ over a loss unless I have not managed it properly. A loss is not necessarily a mistake, over-sizing a trade is definitely one.
JUST MOVE ON TO THE NEXT TRADE
As an options trader, the odds are stacked high against my success. I not only have to get the direction correct but I also have to get the timing right. Big challenge of course, and if my batting average is 50% wins or better that seems to be a good success rate. But trading losses are a part of the game, nobody is perfect in their trading. If you can deal with the losses, hopefully not large ones – then your mind will not be affected, moving on to the next trade is easy.
MARKET PICK
In last week’s commentary, I discussed the defense sector.
Boeing is one of the best performers in the Dow, and it should continue to outperform into 2013. All fiscal cliff worries aside, they have good diversified businesses that should make this a leader over time. They are near an all time high and continue to exhibit good relative strength.
[Editor’s note: Jim Cramer highlighted Bob Lang in his recent Mad Money show for his Boeing pick he highlighted on TraderPlanet.]
= = =
Read more trading ideas here in our daily Markets section.
