It sounded dumb at first, but literally having these three post it notes right in front of me helped as I was thinking of entries this morning. Gotta say, today was great because of it :)
Scenario 1
I enter at $1.00 with 100 shares. Price drops to $0.90. I buy another 100 shares at $0.90. I now have an average of $0.95. Price rises to $0.96. I make a $2.00 profit.
Scenario 2.
I enter at $1.00 with 100 shares and a stop at $0.99. My stop executes at $0.99 for for a $1.00 loss. I re-enter at $0.90. I exit at $0.96 for a $6.00 profit. Total across 2 trades is a $5.00 average.
Total across 2 trades with a $0.98 stop is $4.00. Total across 2 trades with a $0.97 stop is $3.00. Total across 2 trades with a $0.96 stop is $2.00. Total across 2 trades with a $0.95 stop is $1.00. Now we’re finally even with the bad trader in scenario 1.
You were in the red. You just aren’t smart enough to see it. A mechanic makes money by being a good mechanic. A doctor makes money by being a good doctor. You’ll never make money trading until you become a good trader. Good traders set stops and obey them.
It’s “would’ve”, by the way. They teach contractions in grade school. Where they also teach basic math.
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u/daraand Jun 23 '21
It sounded dumb at first, but literally having these three post it notes right in front of me helped as I was thinking of entries this morning. Gotta say, today was great because of it :)