Editor’s Note: Regular readers know Bill isn’t a trading wiz. In fact, he considers himself a “fuddy duddy” when it comes to investing. But we want to keep dear readers up to date on market trends. That’s why, for today’s Diary, we turn to master trader Jeff Clark.
Jeff is a short-term options trader. His strategy allows him to profit, no matter which way the market goes… up, down, or sideways. It even allowed him to retire at 42.
And like Bill, Jeff believes history can teach us about what’s to come. But, when it comes to trading, Jeff warns it’s best to keep your eyes on the road ahead… and shows readers why consistently taking profits pays off better than holding on too long…
“Don’t look back.”
That was the advice the angels gave to Lot and his family as they led them out of the city of Sodom, just before it was destroyed by the wrath of God.
What happened to the city after he fled was no longer Lot’s concern. He couldn’t do anything about it.
So, “Don’t look back” was the angels’ way of saying, “Look forward. There’s nothing to gain from watching what happens behind you. Focus on your future and what is ahead of you.”
Don’t Look Back
As the Bible tells us, Lot’s wife wasn’t all that good at following directions. She couldn’t resist the temptation to look back and see what happened to the city she had just left. And she was turned into a pillar of salt.
Why salt? Who knows? Maybe it’s because too much salt can lead to high blood pressure and heart problems. Maybe it’s because a pillar of salt is fragile, yet immovable.
Whatever. The bottom line: Lot’s wife shouldn’t have looked back. And neither should traders.
Once you’ve exited a position, whether for a gain or a loss, it doesn’t matter what happens to that trade anymore. There’s nothing to be gained from looking back at it. Focus on the future and the opportunities in front of you.
If you look back, you run the same risks as Lot’s wife. Not that you’ll be turned into a pillar of salt, of course, but that you’ll be rendered fragile and immovable.
Brilliant or Stupid
Think about this…
If you’ve taken a profit on a trade and then choose to look back at it, one of two things will happen…
The position will reverse. You will have sold at the perfect time. And you’ll expect to be able to do that consistently in the future. This leads to overconfidence and the belief that you’ll always be able to get out of town just before the market gods unleash their wrath. This is a dangerous thought process.
The position will go on to even bigger profits. You will have sold too early. And even though you took a good profit on the trade, you’ll feel bad because you could have made so much more. This leads you to question every future trade. You’re more inclined to hang on longer than you should. And you may not be able to get out of town in time.
If you’ve taken a loss on the trade and look back at it, then even if the position continues to fall, you’ll still feel bad about having taken a loss.
And if the position turns around and starts to move in your favor, then you’ll likely start hanging on to other losing trades longer than you should – hoping they’ll start moving in your favor as well.
Traders have nothing to gain from looking back at trades they’ve already exited. You can’t change your decision – whether it’s proven brilliant or stupid. All looking back will do is paralyze you, like a pillar of salt, on future trades.
It’s important to understand that longevity as a trader has nothing to do with achieving the maximum profit on any one position. It has to do with consistently taking profits on trades as they reach your price targets.
You’re NEVER going to consistently buy at the low and sell at the high. Trying to do so will eventually lead to missing out on good trade setups, and holding onto trades longer than you should.
So, avoid the temptation to look back at the trades you’ve exited. Be happy with your decision to get out of town. Focus on the future and don’t look back.
Lot and his family left Sodom and prospered in the neighboring town of Zoar.
Lot’s wife looked back and was turned into a pillar of salt.
Editor, Delta Report
P.S. Here’s what I’m seeing ahead right now…
Regular readers of Bill’s work likely have no doubt that a market crash is coming. The warning signs are everywhere. It’s just a matter of time. And I think it’ll be the worst we’ve ever seen…
Now, this might sound crazy… But I believe I’ve discovered the exact date the stock market will crash – this year. And I know exactly what you need to do, right now, to prepare.
On May 22, at 8 p.m. ET, I’m holding an exclusive presentation where I’ll reveal this date… and the one strategy you need to start using immediately if you want to make it through the crash intact. And if you stick with it, you’ll book a profit while most investors lose everything.
You don’t have to be a victim. Get all the details right here.