| | | | 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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