When you first start out trading and you’re introduced to the control and all the possibilities that you have when you see what options can do It’s amazing right? It really is when you think about it, I mean where else are you able to sell options with 10-12% returns every 30-60 days, being able to take advantage of directional opportunities trading stocks like AAPL, TSLA, NFLX, any of the sexy blue chip stocks out there with an account size less than $10K. You didn’t know about any of this stuff and it seems too good to be true and you’re wondering how come no one ever told you it was so easy to make money in the stock market? You spent years in college learning about finance and economics about all this sophisticated terminology how money works. Then you come across a company like Tackle Trading learning cash flow strategies and all you have to do next is just set it and forget it then let the profits roll in and you’re on your way to leaving your day job.

Well, as the cliche saying goes, “if it were that easy, everyone would do it”. Any trader will tell you and I learned this over time as well, the difference sometimes between one successful trade over another is how you manage the position. It would be great if we could sit back and just collect cash flow unconsciously, but that’s not the world we live in and that’s why it’s critical on a day in and day out basis to stick to having a daily routine and being aware of significant support and resistance levels. Knowing this allows you to know when you need to make those critical decisions to protect your trade. Now obviously when you need to hedge, it frustrating when your trade turns back in the direction you wanted it to go originally, but if it gave you a peace of mind knowing you were protecting your position then that’s something you should be able to live with. Think about it this way, it’s no different than the amount of money we spend monthly on insurance for auto/health or for your phone even. It would be great to have all that money saved not being spent on something that you hardly ever use it for but when that one moment does arrive, you don’t regret one dollar you’ve spent to insure your protection. 

I thought that this would be a great topic to discuss under the current market conditions that we have and I’m confident there were some of you out there trying to figure out what to do as the bull run came to a halt. Just know that you can avoid major losses or even turn losing positions into profitable ones with the right trade management skills. The better your skills are with managing positions the more confident you’ll be when things turn against you, hence giving you a clear mental space you need to be able to trade effectively in any market condition we’re in.

Chart of the Day

QQQ = Nasdaq 100 ETF

The Nasdaq has been the top performing index hitting all time highs as recently as early September. The pullback has been significant bringing the index down over 10% for the month.

Video of the Day

The importance of good risk management

Watch this tutorial from Coach Noah where he discusses the importance of good risk management.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Mind of a Trader 2:30 PM EST

Join Coach Mark for his weekly live Mind of a Trader at the Closing Bell.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

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