- 19
- Dec
I think every traders will agree that setting Stop Lost is one the most important thing to do in trading. In fact, this is the first thing that all traders should do right after execute the trade. For me, Stop Lost is my golden rule that I always practice in all of my trades.Â
Just look at what happen to my latest portfolio, ASF. I bought ASF JAN07 40.00 CALL at $3.50 on 15-Dec-2006 after monitored it for about an hour. On that day, I locked my Stop Lost at $41.00 (base on underlying stock).
When the market open on Monday (18-Dec-2006), I readjusted my Stop Lost from $41.00 to  $42.20. Unfortunately, the market did not move in my favour. I was traded out at $2.90 as ASF drop to $42.20 with 17% lost. Do I feel bad? No! Being involved in stocks & options trading for more than 2 years, I would say this is normal. It is impossible for us to win 100% in all our trades. But we can’t lose most of the time too! We need to find a good system or strategy that could produce more winners than losers. I’m glad that I’ve found a great strategy & great guru with Star Trading System. I need to confess here that Jason’s system is the only one strategy that I use in my option trading. With 90% success rate, what else can I say.
Now, back to ASF. Let see what happen next after I closed my position automatically as the price hit my Stop Lost. Before I went to bed about one hour after I closed my position, not much changes in ASF price. But when checked the price on the next morning, ASF dropped $1.09 (2.57%) and closed at $41.30. Want to know what the price of ASF JAN07 40.00 CALL? It’s $2.30.
Do you see the beauty of the Stop Lost now? If I didn’t set & activate my Stop Lost, I’ll be losing 34% in that trade alone.  Â
Click on the thumbnail below to view the full size chart.
Want to know the secret of my trade?
Check out the Star Trading System at masteroequity.com
December 25th, 2006 at 9:29 am
[...] This is a pretty dry week for me. There were good result for the Telechart scan but failed entry rules. This is what I like about Star Trading System (STS). It’s entry rule is very powerful and has done a great job so far of keeping me out of the market with no qualifiers. The only trade that I executed is to closed my ASF JAN07 40.00 CALL position that I bought on 15-Dec-2006. Infact, I did not personally close the position myself but done automatically by my Stop Lost setting. I lost 17% in this trade. Thanks to The Beauty Of Stop Lost! If not, I’ll lost more than that. [...]
February 12th, 2007 at 3:10 pm
[...] Even though I lost 12% from AGE, but 58% profit I made from FAF manage to give me 46% profit when I closed both position end last week. Once again, the Stop Lost strategy has successfully prevented me from making a bigger lost! [...]
October 25th, 2007 at 11:48 am
[...] Another scary day, wasn’t it? CIEN went into a type 1 last gasp action (please read the Star Trading System’s manual if you do not know what it means) and scared the hell out of most of you. That is the reason why we hold doji day stop loss… if you use another other means to control loss during the first 2 days, you are risking a stop out unnecessarily. [...]
February 27th, 2008 at 12:10 pm
[...] The Dow continued to soar today, bringing LEN higher… do you guys see now how destructive volatility is? Even though a stock has the potential to go higher, it could swing wildly in the short term. This is why people stay out of volatile markets. But, if we didn’t have our doji day stop loss in place, we could have lost our positions 100% 10 times before 1 LEN turns up! Well, we as Star Traders, move ahead and continue to stick to our rules. [...]