Trader Psychology

Hi Shoppers,

 

Probably the toughest part to being a successful trader is maintaining discipline.

 

To maintain our discipline, we can’t let emotions get in the way of our trading decisions.

 

 

It is human nature to “give a little” or move your stop price. Meaning, “Oh, just a few more cents and it will turn around and go my way”.

 

Next thing you know, you’re down 80% on the trade.

 

It’s called hoping and wishing and praying. 

 

When you find yourself doing any of these three things, get out of the position.

 

As traders, we can also find ourselves in “streaks” of winning or losing.

 

While in a winning streak, we tend to become a bit more cocky.

 

We will go for the 100% return when the prudent thing to do is to take the 80% sure money and move on to the next trade.

 

When we’ve had a few losing trades back to back, we may become a bit too skittish, not trusting ourselves like we usually do, and take our profits (and losses) too soon.

 

When you find yourself in a losing streak, go back and analyze your losing trades for what missteps warnings you or missed. Perhaps even trade a bit less for a while.

 

It’s possible you are doing everything right but the market is not cooperating. It does that sometimes.

 

Just remember to always be able to trade the next day — i.e. don’t blow out.

 

Every day is a new trading day.

 

Read on for my trade idea for this trading day.

 

Top of the Trading Morning

 

Check out the stock chart in MGM Resorts (Ticker: MGM):

 

 

MGM has traded up since the low of $35.72 on July 19, trading a high of $50.39 yesterday.

 

Closing at $47.40, yesterday’s candle is bearish engulfing; it completely engulfs the previous day’s candle.

 

This could signal a change in trend.

 

Looking at the options, I will be buying the Nov. 19 expiration cycle puts:

 

 

      • If MGM opens and trades lower today, I will pay up to $1.38 for the Nov.19 47 puts.
      • My stop loss price will be $.97 and I will take my profits around $2.20.

 

Trade Review

 

 

Yesterday, it traded back down to that support line. It is holding so far. If it trades lower today, I will be out of my spread.

 

 

      • I am still in my Greenidge Generation (Ticker: GREE) Nov. 19 30/50 call spreads. I think the stock chart is still in a bull flag. Today may confirm or negate that.

 

      • I closed my American Airlines (Ticker:  AAL) Nov. 19 19.50-strike calls for an 85% profit. 

 

      • In Haliburton (Tocker: HAL), I prematurely closed my Nov. 19 26-strike puts for a 39% gain.

 

I say prematurely because I predicted HAL to trade down to $24 and it came within $.13 of that yesterday. But before that, it gapped up on the opening to $.57 and came back to unchanged, which I considered  a good time to get out of my puts.

 

It then proceeded to trade lower — and yesterday’s candle looks like it may trade even lower.

 

Still, though, a winner.

 

Thanks for Reading … See You Next Tuesday!

 

Licia Leslie

 

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