Managing Editor’s Note: Beginning August 14, a fresh group of stocks could start climbing – fast. It has to do with an obscure stock market anomaly and a proprietary indicator that can detect big stock moves – weeks in advance.
Our colleague, Wall Street insider Jason Bodner, discovered this anomaly during his 25 years on Wall Street – and built a one-of-a-kind system around it. Last time this anomaly appeared, Jason’s system was able to flag stocks right before they moved up 825%, 2,105%, and even 4,496%.
Now it’s happening again. Jason is sharing all the details on Wednesday, July 29, at 8 p.m. ET – including the name of his #1 stock for free. Register instantly here.
One of the biggest misconceptions in trading is that success comes from finding the perfect entry.
While entries are certainly important, they’re rarely what separates successful traders from everyone else. More often than not, it’s the exit that truly matters.
Over the past 40 years, I’ve known and mentored plenty of traders who could consistently identify good entry points. They could read charts, recognize momentum shifts, and identify when the odds were moving in their favor.
But many of them struggled to make money long term. The reason was simple – they just didn’t know when to get out.
Buying a stock is the easy part. You’re optimistic about the opportunity ahead and excited about the chance to make some profit.
However, selling is different. It forces you to make a decision, and that’s where emotions can interfere with your better judgment.
Every trade eventually becomes a selling decision. The market doesn’t reward you simply because you bought well. It rewards you for managing the trade well from start to finish.
Many traders make the same mistakes.
A common one is taking profits too early. You finally have a winning position but become worried about giving those gains back. So you sell at the first sign that a stock’s move could be stalling. Then you watch the stock resume its climb from the sidelines.
On the flipside, another common mistake is holding on to losing positions too long. Instead of taking a loss on the chin, you decide to bunker down and ride it out in the hope the stock will come back. But hope is not a winning strategy. A small, manageable loss turns into something much bigger. Worse still, it becomes a major distraction, so you miss out on other potentially lucrative trades.
A third common mistake is becoming too attached to a stock – especially one that has delivered previous winners. Being subjective or emotional about a decision doesn’t work in trading. The market doesn’t care how much you like a company.
These common mistakes are why I’ve developed exit strategies across the years…
Before I enter a trade, I already know what would cause me to exit.
If the original reason I entered the trade no longer exists, I know that I’m out. For example, if I entered a trade expecting inflation to accelerate or Treasury yields to rise, there’s no point sticking to the trade if the situation changes.
Likewise, I don’t argue with price – recall that price is king. If the price action tells me I’m wrong, I accept it and move on. Also, when momentum fades or a stock doesn’t respond as I’m expecting, it’s time to reassess and be ready to exit.
I also continually weigh up the potential reward against risk. Even if the trade is still performing, I’ll exit if the remaining anticipated upside is not enough to justify the risk. Ruthlessly protecting your capital is key to successfully trading in the longer term.
And if the trade doesn’t work within my time frame, I’ll allocate my capital to a better opportunity elsewhere. Or as I regularly tell folks, don’t be afraid to exit and sit on the sidelines.
Sure, some stocks will continue rallying after you exit. Some losing trades will rebound after you’ve exited. We’ve all been there, and it’s frustrating.
But your job as a trader isn’t to wring out every last dollar from a move. Your job is to stick to clear entry and exit rules and consistently make disciplined decisions, manage risk, and protect your capital.
That’s what will put you ahead of everyone else and allow you to be a successful trader over the long run.
Regards,
Larry Benedict
Editor, Trading With Larry Benedict
Reading Trading With Larry Benedict will allow you to take a look into the mind of one of the market’s greatest traders. You’ll be able to recognize and take advantage of trends in the market in no time.
