Taking Extra Steps to Protect Trades

The end of the month is here. July’s trades are almost a thing of the past.

Overall, I am satisfied with the returns. It was another profitable month in the Splash Zone, and though I’m not overly thrilled with some of the price action that we got last week, it is something that I can live with. As has been my consistent practice, in this slow-uptrend market, I buy into a stock, I raise the stops as the stock becomes profitable, and I keep riding the trend higher, until there is a reversal that allows me to walk out with the majority of my gains.

But because this market has a penchant for sudden and quick sell-offs on an intraday basis that can get downright ugly, it is rather easy to get stopped out of positions quickly. We saw that a few times in June, and some jaw dropping moves in the month of May. All of these moves happen following a solid move to new all-time highs.

We can’t predict when these moves will happen, but we can prepare for them. So last Thursday’s intraday dip took us out of our long positions, but because I had raised the stops along the way, we were taken out for a profit on each of them.

That doesn’t mean, I like what happened…but staying profitable and protecting those profits, is sooooo important.

But even more important is not allowing a winning trade to go negative on us. So even if I don’t make as much as I would like to make on a trade, that is okay, but what isn’t okay, is allowing a solid winning trade to turn into a losing trade because the risk wasn’t managed along the way, by raising those stops.

Few new things worth mentioning:

1. My latest podcast episode: How To Increase Your Stock Market Profits

2. My latest Blog Post: Always Assume You Will Lose On Your Trades

If you are tight on time, and can only do one of them, I would choose #2. It is such an odd title for an article, and not what we are typically taught when we learned to trade, but when we take this approach, and realize we are totally capable of messing things up when it comes to trading, it is only then that we will focus on the risk side of the trade.

When you do that, you will see the profits increase and the losses decrease.

Tomorrow is a new month – so what ever mistakes you made in July or before, learn from them, decide how you will improve on them, and trade better in August!