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How I Enter Trades

Today I entered an AAPL long as well as a Members only trade. I am often asked how I enter trades:

  • I review what the thesis is, the chart and I look at the options.

  • After I make the decision that I want to take a shot, and after I have set my STOP, I enter the trade.

  • NEVER EVER EVER enter a trade without a STOP. If you do, you are not being smart.

  1. On the initial entry, I buy no more than half of what I want to own.

  2. If price moves in my direction, that's fine with me.

  3. If, however, price moves against me, I will look at the chart on the daily, indicators I use and then enter the other half. By doing this I do two things:

  4. I average my cost down

  5. I reduce my risk from the original entry

  1. The second entry, if there is one, I will make an ENTIRELY new investment decision based on any new data that has occurred: price change, news, order flow, volume.

I repeat the following mantra all the time: IT IS BETTER TO NOT OWN ENOUGH THAN TO OWN TOO MUCH.

This morning's AAPL trade is a great example: I bought calls for .52.

I have a tight stop bc the catalyst is very close: WWDC.

I only bought half of what I wanted. If price were to go down between now and June 5, I would make a new decision and either add the second half or wait.

As soon as I bought the options price moved to .60. I will not add more unless it comes back down to BELOW my entry and even then, I might not - remember the second entry is a new decision.

This is how I traded other people's money for 30 years.

It has never served me wrong because if you really look at it, it completely supports my FIRST RULE OF TRADING: CAPITAL PRESERVATION.

It also prevents doing something stupid because you are excited about a new trade opportunity.

Hit me up with any questions and don't forget, our Discord group is every day and is live chat with ideas.

Often new trade ideas will hit there first as we discuss them. And of course, they will always be posted on my site.

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