MORE THAN ENTRY - When you take a position, there is so much more to the trade than the level you get into the market at. Naturally, this is the area that most people think about when talking about trading, but the reality is (at least my reality) that success comes from the planning around the position as well. It's just as important to understand what time frame you are thinking about when you get into a position and where it is that you are going to get out when the position has moved against you to the point where it has been a material break in the market that actually means something. There are times where the entry of a position looks fantastic, but if the stop loss isn't planned accordingly, you never give yourself the chance to benefit from the upside. There have been far too many times where I see a trader get into the market way too early, only to place their stop-loss at levels I think are the type of levels you finally want to be getting involved. And so the key takeaway here is that you better be clear about not only where you are getting in, but where you will need to get out if it isn't making sense.
DRAWING THE LINE - Now, there is also the other side to all of this, which makes trading so challenging. What do I mean by this? What I mean is that there are going to be times when you do everything right, the trades looks gorgeous, the stop loss is perfect and it still doesn't go your way. And quite often, when this happens, because the market is already so extended when I took the position and then continues to where it takes me out, the market is at that point stretched in an unthinkable way that sure will result in imminent reversal. And as much as getting taken out of a position like this will sting, it's an unavoidable sting that is going to happen at times and you just need to remind yourself of the fact that you have applied discipline and over time, that discipline is what will keep you trading. There is always going to be a line we need to draw to separate and move on and it's a part of the way it goes. It won't happen often, but it's a way of life and should be taken as a good lesson learned. If on the other hand you decide to hang on because you just can't see it going any more in that direction, even if you're right in that instance and the market moves back, it's a loss in my view, as you changed the plan and gave up on the control and discipline, which will unquestionably hurt you over time. Bottom line here today. Make sure to plan as well as you can and also make sure to get out where you said you would before you got in, whatever the case.