Good thing I used this trick to give me another chance to win.

Recently we looked at a longer term option trade on DIS. (You can see the article here). It did Jump and offer a small gain but then it pulled back and is down. Normally, I’d be really aggravated but we set this up to give ourselves an increased chance to grab a win.

If we lived in a vacuum, we would set and entry and exit point and not have to think about the trade in between. But how you manage a trade while you are in the trade it is just as important. I like to call this the “Now what?” mistake that traders often make. When something you didn’t expect happens when you are in a position it seems like there is a voice on your shoulder that looks at you and says “Now what?”

It would be great if we could just read this book and stop making mistakes. The truth is mistakes happen. We will break rules and we will have to make unexpected decisions while we are in a trade.

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In the rest of our lives we do everything we can to prevent breaking trading rules by using systems and strategies designed to reduce the possibilities that we will stray from what we know is right. We have watches that tell us to exercise, we have to do lists to make sure we don’t miss important things, there are laws that remind us to not act dangerously. When we trade we can also create processes that help us follow our rules and have the flexibility to react when things get crazy.

This is where making sure we have a third option allows us to turn a bad trade into a good one. The first two choices we have when we are in a trade are the obvious ones. We can sell or we can buy. Selling is pretty straight forward, just get out of the trade. Buying more of a position when we are in a tough trade is the riskiest.

Some traders will double down on trade thinking “It is even cheaper now, why not buy more?” While buying more is a choice, it usually doesn’t pan out that well.

The third choice that is easy to overlook is to just wait. If we have built enough time into our trade we have created a third choice we can consider. Remember the last mistake traders make? Stocks go up and down and most will do both over time. In a perfect world our trade will do exactly what we want but in reality, it might go against us before we hit our profit target. Being able to wait it out with no additional risk is the key.

Using LEAPS is a great way to give yourself multiple chances to win. If you want to learn more about how to put the advantage of time on your side, check out Andy Chambers Market Propulsion guide. You can get it here.

Keep learning and trade wisely,

John Boyer

Editor

Market Wealth Daily