Giving a trade enough time to recover
| | | | | | | | | | | | Real Money, Real Trades: A Winning Trade From A Rough Start
In trading, there are good days and bad days…
But it's not often that a trade that went completely south on you, makes a full comeback and turns into a winner.
But with the right type of trade, you can set the conditions to give trades the potential to turn into profitable positions as long as possible.
So today, I will share one of my recent trades with you, how bleak it looked, and how it ended up recovering and yielding me a 50% profit.
On May 24th I placed a credit spread on QQQ… And you may remember that the markets were going up, up, and up…
Until they weren’t and a big sell-off started the day I entered the trade.
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| | | | Here was the big headline that day:
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| | | | And despite that catastrophic dip in which I was down nearly 100% on the trade, prices eventually recovered and I was able to cash out on June 6th for that 50% profit I shared earlier.
But here’s the thing, watching the market is hard to do for most of us all day… And we all know how volatile the market has been lately. Just take a closer look at the volatility during my trade:
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| | | | Most of the people following me on that position were kind freaking out (I don’t blame them).
In fact, some people were saying we should have cut off the loss at 50 or 60 percent instead of letting it lose 100%…
But the way this trade works is that we purposely give it all the time needed to make a turnaround. Which means being comfortable risking the entire position.
That’s hard for most people but I think it’s one of the most important skills you can learn.
That is one reason I am a big fan of setting automated closing orders for profit taking. If the trade goes against you, you lose. But if the trade - at any time - makes a big enough move to hit your target, the broker automatically clocks you out with a win even if you’re nowhere near your brokerage account.
Nowadays, you can easily do it with a “GTC” limit order in your brokerage account just like I did on this particular trade.
From May 24th - June 5th, the trade looked dead in the water. But because of the way I set these up, we’re able to use as much time to our advantage as possible waiting for any kind of move in our favor.
Sure enough, on June 6th, the market ripped up and my trade flipped from being down 90+ percent, to a 50% gain just like that.
Any regular call option would have lost money and never recovered, but that’s the power of using these kinds of setups!
And the best part is I didn’t have to watch the charts minute by minute for two weeks, I didn’t have to ride the emotional roller coaster of being up and down constantly… That’s why it’s important to have a high level of conviction and confidence in your trades and the willingness to be wrong when you’re wrong.
That way, you can set up your trade and walk away which I think is one of the most important things any investor can get in the habit of doing!
- Nate Tucci
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Real Money, Real Trades: A Winning Trade From A Rough Start In trading, there are good days and bad days…
But it's not often that a trade that went completely south on you, makes a full comeback and turns into a winner.
But with the right type of trade, you can set the conditions to give trades the potential to turn into profitable positions as long as possible.
So today, I will share one of my recent trades with you, how bleak it looked, and how it ended up recovering and yielding me a 50% profit.
On May 24th I placed a credit spread on QQQ… And you may remember that the markets were going up, up, and up…
Until they weren’t and a big sell-off started the day I entered the trade. Here was the big headline that day:
And despite that catastrophic dip in which I was down nearly 100% on the trade, prices eventually recovered and I was able to cash out on June 6th for that 50% profit I shared earlier.
But here’s the thing, watching the market is hard to do for most of us all day… And we all know how volatile the market has been lately. Just take a closer look at the volatility during my trade:
Most of the people following me on that position were kind freaking out (I don’t blame them).
In fact, some people were saying we should have cut off the loss at 50 or 60 percent instead of letting it lose 100%…
But the way this trade works is that we purposely give it all the time needed to make a turnaround. Which means being comfortable risking the entire position.
That’s hard for most people but I think it’s one of the most important skills you can learn.
That is one reason I am a big fan of setting automated closing orders for profit taking. If the trade goes against you, you lose. But if the trade - at any time - makes a big enough move to hit your target, the broker automatically clocks you out with a win even if you’re nowhere near your brokerage account.
Nowadays, you can easily do it with a “GTC” limit order in your brokerage account just like I did on this particular trade.
From May 24th - June 5th, the trade looked dead in the water. But because of the way I set these up, we’re able to use as much time to our advantage as possible waiting for any kind of move in our favor.
Sure enough, on June 6th, the market ripped up and my trade flipped from being down 90+ percent, to a 50% gain just like that.
Any regular call option would have lost money and never recovered, but that’s the power of using these kinds of setups!
And the best part is I didn’t have to watch the charts minute by minute for two weeks, I didn’t have to ride the emotional roller coaster of being up and down constantly… That’s why it’s important to have a high level of conviction and confidence in your trades and the willingness to be wrong when you’re wrong.
That way, you can set up your trade and walk away which I think is one of the most important things any investor can get in the habit of doing!
- Nate Tucci
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