DTT Buzz

You've heard or read a bunch of secrets to taking strokes off of your golf game, but what about your trading game?

Here is a quick tip sure to improve your score, er... I mean bottom line.

Small Losses = Big Profits

1. Get a piece of paper out and draw a 5 by 5 square on it.
2. In every trade you do from now on, as soon as your technical reasoning turns against you and the trade no longer looks good, get out. Usually this will end up with a small loser.
3. Every time you do this for a small loss, put a check mark in one of the boxes.
4. When all 25 boxes are filled with check marks, you'll have 25 small losses on the books.
5. Now, compare how you've done trading since you started taking small losses. In 90% of the cases, this small trick improved the traders' bottom line.

Taking small losses is often a battle of ego and emotion more than it is a exercise of logic. If you can convince yourself that taking small losses are actually good over the long-run, I promise you'll be a better trader.

Taking small losses achieves the following results:

• It makes you constantly re-evaluate your position logically. If you're holding XYZ long, and you wouldn't be buying here, should you really be holding?
• It eliminates the monster losses. Everyone wants to hold those small losers and hope they turn into winners. But if your technical analysis was wrong (and it was if you're holding a loser) then that trade is more likely to turn into a monster loss than a small win.

Remember, you CAN be profitable with 1 out of 3 (33%) winners. If you make 5% on your winners and lose 1% on your losers, you'll average 1% gain per trade.

Trendlines, support and resistance, gaps, head and shoulders reversals are all meaningless if you don't have the courage to exit when you've been proven wrong. Take small losses!

DaytradeTeam is always re-evaluating its positions, ensuring maximum profitability for its members in swing trading, day trading and options trading. Try a one year membership for just $995. Not only will you likely pay for your membership fees with our trades, you will definitely learn enough to improve your future trades by far more.