Options Made Easy: Your Guide to Profitable Trading, Second Edition

Always Have a STOP in Mind Whenever You Make a Trade

This is covered in Chapter 10, “Trading and Investing Psychology,” and in Chapter 11, “Putting It All Together—A Call to Action.” It is imperative that you know where you will exit a position, whether it is a profitable situation or otherwise. Some people don’t like to actually place stops with their brokers. Fair enough, but you must have one in your mind at the very least, and once there, you must act on it if the stop has been breached. Also, you must always have in your mind when you are likely to want to take profits and you must act on that too if and when the situation occurs. You can set a mental stop, where the market makers cannot see what you are doing and artificially manipulate ...