| Making money trading stocks takes patience and | | | | Unfortunately, that situation happens to the best |
| persistence. In this article I want to address the | | | | traders, too. |
| problem of winning trades turning into losing trades | | | | - Truth #1: Don’t risk more than you can afford |
| and what can be done to avoid this error. Learn to | | | | to lose on any trade. |
| obey what I’m about to teach and you’ll | | | | If you consistently see winning trades turn into losers |
| have more money, more confidence, and more fun! | | | | there are a couple of things you should do: know |
| Does this sound familiar – you scan for a list of | | | | where your exit is before you ever buy the stock. |
| stocks to buy and find several candidates. As you | | | | Secondly, put a stop in at your exit price and obey it. |
| run through your charts you see one or two stocks | | | | There are a variety of ways to set stops. Pick one |
| that look like they might move. After hours of | | | | that fits your appetite for risk and stick with it. |
| research you’re convinced that you’ll take a | | | | The “obey the stop” admonition is often |
| trade if the stock hits your buy point and sure | | | | difficult, but you must do it. If your stop is hit, get |
| enough, your buy order is executed and you own | | | | out. |
| the stock. | | | | - Truth #2: Capital preservation is crucial and |
| For several days you watch the stock climb upward, | | | | understood by all successful traders. |
| but today it has fallen rapidly below your entry. You | | | | If you want to be a successful, money-making trader |
| do nothing, shocked that your winning trade has now | | | | you’ll need to overcome some psychology. |
| become a losing trade. | | | | Realize that not all trades will be winners. If you set |
| We’re going to correct the above scenario by | | | | your stops and most importantly obey the stops |
| doing a couple of things so you can stop feeling the | | | | then your losses should be small. |
| gut-wrenching pain of a winner turned loser. | | | | Don’t forget to move your stops up as your |
| First, realize that losers are a part of trading. Once | | | | trade becomes profitable ensuring that you’ll |
| in awhile, the above situation can’t be avoided; | | | | keep some money even if the stock goes against |
| there may be a horrible news story or rumor about | | | | you. Manage your trades by obeying your stops |
| the stock that causes it to gap lower. | | | | and you will have money to put in the bank. |