Half the battle to stop the bleeding is knowing why you lose.
‘Opportunity Cost’ is defined as the loss of potential gain from other alternatives when one alternative is chosen. As a trader, we see this all the time. A stock hits our target, we sell for a profit, then get angry and frustrated when the stock continues to head in our direction. The ‘opportunity’ is now lost because we sold. I talk to people all the time who make 10% in 10 minutes but are so horribly despondent because they watched their stock rise to a potential 100%. I say “give your head a shake”. Look to see what you made, not what you could have.
Part of my training is to eliminate the words ‘coulda, woulda shoulda’. They serve no useful purpose, only to emphasize the loss of an opportunity. Fact is, if you made money, you should celebrate knowing that no one ever went bankrupt in making money. Opportunities will come and go all day long; you can’t get them all. At the other end, if you do in fact, hold on and make more, congratulations. The danger with that is that if you come to expect it, then it’s only a matter of time before you get burned. Has it ever happened that you kept moving your sell order one cent at a time, fully believing you will hit the top? Like so many, I too have ridden a stock way up to a 70% gain, only to sell for a loss. I got greedy. The ‘Opportunity Cost’ got me.
Traders, that does not happen anymore. And with proper training, it should not happen to you either.
Hugh W. Grossman, Head Trader at Day Trade SPY.
Hugh Grossman is the founder and Head Trader at DayTradeSPY and uses his vast experience to teach his methods to make consistent daily gains trading SPY options. Join Hugh in his interactive Trading Room to see how he regularly pulls in the profits!
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