You Don’t Need to Make Money This Way

Hey friend,

Today’s data brought another inflation increase: September import prices rose 1.1%, above the 0.8% forecast.

Industrial production also beat expectations, climbing 0.7% versus 0.4% expected.

Let’s see how the markets have been moving.

The Daily Direction

Note: Indexes closed slightly higher yesterday but – with the exception of the Dow – have been moving lower this morning. The short-term direction for the S&P 500 slipped back into downward territory.

The Daily Nugget

You don’t have to make your money back in the same stock.

“I’ll sell when I get back to breakeven.”

It sounds reasonable. You bought a stock at $100, it’s now $85, and you’d rather wait than take the loss.

But why should $100 decide what you do next?

That price tells you what you paid. It tells you nothing about whether the stock is a good use of your money today.

Maybe the company’s outlook has weakened. Maybe the stock keeps falling while others attract buyers. Yet you keep holding because selling would mean admitting the trade didn’t work.

Meanwhile, stronger opportunities have to compete with a position you wouldn’t buy again.

This is especially easy to do when market leadership changes. You keep waiting for a former favorite to bounce while dismissing other setups because you’re already tied up.

So ask yourself:

If this position were cash today, would I buy this stock at its current price?

If the answer is yes, spell out why. There may still be a solid setup, with enough upside to justify the risk.

But if your best reason is “I’m down too much to sell,” your entry price is making the decision for you.

A losing trade doesn’t automatically need to be closed. It does need to earn its place in your account on the same terms as a new one.

And if you find a better use for that money, you don’t need the old stock’s permission to move on.

A $1,000 gain elsewhere improves your account just as much as a $1,000 recovery in the stock that let you down.

The Traders Agency Team

P.S. Don’t forget that every Monday at 9 a.m. Eastern, Head Trader Ross Givens goes LIVE on his YouTube channel to break down the markets in real time and highlight overlooked opportunities.

It’s completely free so make sure you don’t miss the next one.

Use this link to join next Monday at 9 a.m. ET.

Have a good weekend.