“It was never my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!” — Jesse Livermore
Our weekend swing trade session was intense.
Almost an hour devoted to one question. “How do I manage trades that move from positive back to my entry price?” (Thank you for the great question Synthia)
When I owned my trading firm in NYC we called this “The Phantom Zone.” Not quite positive, not quite negative, but very annoying.
After a round of back and forth with the community we discussed goals. In other words why are you trading? And more specifically growing your account over the long term. and the number one priority for us as traders.
Which is capital preservation.
Something rarely taught is that you need experience, real-world decisions that help you make better decisions. And the ONLY way to gain that experience is by getting in your reps.
Said differently, you need to trade, to learn how to trade.
Then we brought the discussion back to long term goals. Long term account growth. And how one trade not performing should not create stress. You’re getting feedback from price action.
You bought the stocks. Buyers pushed it up, sellers dropped it back down. Buyers didn’t have the demand to hold price higher.
Buyers tested the market, and failed. Simple as that. You made an educated guess and the stock failed to hold the bid. Now your job is to preserve your capital.
Holding a trade giving you negative feedback is contra to your long term goals. There’s abundant opportunity, endless opportunity.
More opportunity than you or I will ever have enough capital for! This is a great thing!
But what if I exit and the stock goes higher without me?
Let go of your ex, and move to the next trade.
Livermore’s famous quote relates to being patient for new trades, and being patient while you’re in a winner. It’s the first part that you need to follow as you gain experience.
Stop obsessing over the result of each trade. Think long term, Have the patience to learn, to improve, and gain valuable insights from each outcome.
If a trade isn’t working, kick it out and go look for the next wonderful opportunity.