User: Ryan Mallory: Education: Now Ev'ry Trader Knows that the Secret to Survivin' | SharePlanner

Now Ev'ry Trader Knows that the Secret to Survivin' | SharePlanner

What's the dadgum secret that this gambler knows that will allow us to succeed long-term in trading the markets? 

Well let's just say it's a very simple secret: it goes like this... 

[It's] knowin' what to throw away and knowing what to keep.

Now to translate it for us traders:

There's a time in place when to keep a trade, when to sell it, when to cover it, and when to let it just keep on going. Knowing when you are going to sell a stock, why and how you will sell it, and before you even enter the trade preferably - yes conditions change, but you should have at least a gameplan going into it though - is absolutely a must. 

There are always reason after you get in the trade for holding a stock when it is running in your favor. That might include tightening the stop to lock in gains, or it might be recognizing the stock is parabolic and that there likely won't be a better time than the present time to cut the stock lose and move on with the profits in hand. 

There's other reason too, including outside forces, like quarterly earnings,  FDA announcements, Fed-related news events. The list goes on and on and on. 

The secret though is knowing that you need to get out even if that means you run the risk of leaving money on the table - if the risk is stacked or heavily increased against your trade, then get out. Move on. Plenty of other stocks to trade and make some money off of. 

Now Ev'ry gambler knows that the secret to survivin'Is knowin' what to throw away and knowing what to keep.'Cause ev'ry hand's a winner and ev'ry hand's a loser,

'Cause ev'ry hand's a winner and ev'ry hand's a loser

Couldn't be more true. Think about it - every stock you trade is simultaneously a 'winner' and a 'loser'. That's because stocks are constantly in motion. Your job is to figure which side of the trade is the winner. That is why a healthy background in technical analysis is paramount for trading. But it can't insure success by itself. The first line of the verse must be combined with reading the charts correctly. 

I mean think about it, if you hold a stock beyond the period in which it is a winner, then you lose on that trade and if you lose right away on the stock, your stop-loss then defines the end of your time period. If instead you choose to hold beyond that stop-loss, you end up possibly having a major loss on your hands... all because you didn't know when when to fold 'em.

So let's Recap

1. Because a stock is in perpetual motion - it can be both a winner or a loser - do your analysis to increase your odds of being on the 'right' side

2. Have a plan up front to know your stop, target, and entry

3. It's ok to change parameters during the trade, AS LONG AS it doesn't increase your risk, and perferably tightens risk, and expands reward. 

4. You can be a winner in the time period you choose to trade in, but ultimately a loser if you go outside the time period bounds. 

5. Know when a trade is done and over - don't overextend your welcome in a trade - Know what to keep and know what to throw away. 

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