Published On: Mon, Jul 29th, 2013

Day Trading: The Threshold of Pain

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As a day trader, you know exactly what I’m talking about when I mention the threshold of pain.  It’s the point when you cut your losses on a busted play.  For whatever reason, I have always felt if my money isn’t making money, I have to cut my losses and move on to a winner.

But what is that threshold? Is it 20%, 25% or as high as 50%?  It really doesn’t matter, we all have a tolerance of where we want to cut our losses and make it up somewhere else.

It doesn’t matter if you are scalping options or a momo play on the OTC; we probably all trade about the same.  Unless of course you are in the KNOW, which makes every trade you do illegal to start with, so we won’t even go there.

For me, I know my exit before I enter…even if my entry changes,my exit doesn’t.  If I miss altogether, I never chase.  After a decade of trading, I have learned one thing;stocks go up and down, or don’t trade at all.  However, there is always another play and the goal is to never have to resort to exiting at the threshold of pain.

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