I’m a firm believer in letting a position breathe. But at the same time, I’m the biggest advocate of protecting your trading account.
Account preservation is always number-one.
So, how do we balance the two? Well, it’s kind of an art form…
You have to be willing to give it some room at the beginning of a trade.
Then, you have to be prepared to wind in your stop as soon as the market presents you the opportunity to do so.
Let’s take a look at a few examples of how I’ve managed my stops with great success…
Reducing Risk
In this instance, we’re looking at Citigroup, Inc. (C).
Price action settled below the channel support structure by a 1%+ margin, and at the open of the trade, the stop placement had approximately a 12% risk.
As price action advanced, popped back up and retested the structure it failed from originally, this was the market offering us the opportunity to advance our stop.
Unfortunately, the trade didn’t transpire in our favor.
But by utilizing this approach, the risk was dialed down from 12% all the way to a mere 3%.
You can take 3% risks over and over again on weekly settlements, and it would take a long time to diminish your account value.
With that in mind, the idea of trimming risk by 9% when the market offers you the ability to do so is truly lifesaving.
Remember, preservation of your account value is number-one!
Set It & Forget It
Here’s another example of a different trade in progress…
Price action traded within 1% of my targeted area to book profits.
So, what did I do? I moved my stop to breakeven.
I’m not going to let a trade that came that close to locking in profits turn negative.
Why didn’t I just close the position?
Well, I’m not glued to my computer day in and day out. I’m out and about living my life, enjoying the freedom trading affords me.
So, I utilize a “set it and forget it” method. Check it out for yourself…
This trade in Alphabet Inc (GOOGL)may continue in my direction or it may not. But my risk has been mitigated at this time.
As you manage your positions, I encourage you to always keep this in the back of your mind: “Live to trade another day.”
This mentality will keep you in business for a lifetime!
Get Involved
No one knows more about the importance of stop loss strategies than my good friend and professional trader Josh Martinez.
He uses a similar technical approach inside of his entry level futures trading service, Futures War Room.
Josh is one of the greatest futures traders I know. We often bounce ideas off of each other as we analyze the market.
He describes his futures trading strategy as possibly “the world’s most profitable side job”…
This strategy helped Josh turn an initial deposit investment of $500 into $39,282 in less than two years.
All you have to do is access a little-known portal in your brokerage account and start copying Josh’s strategy — step by step, and trade by trade.
It really is that simple.
Rules to Live By
“Let the improvement of yourself keep you so busy that you have no time to criticize others.” Roy T. Bennett
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.
