At Safe Option Strategies we teach trade adjustments. We believe that any trade you open should be one you could adjust in case the stock moves contrary to what your expectation is. But, it is a common misconception that any trade can be adjusted to profitability when it goes against you. While that is an ideal scenario, sometimes what an adjustment will do is simply lessen the loss on a trade.
A great example of this is a trade we opened on NFLX about three weeks ago. The trade moved as badly against us as possible, and did so in just one day. By the time we could react and make an adjustment (our secondary exit plan) we were already looking at our max loss in the trade. By adjusting, we have now created a situation where we will still take a loss, but rather than 100% of our max loss, we are looking at between 35 and 50 % of our max loss.
To see this trade and the adjustment we made to it click here.
No comments:
Post a Comment