one way to book profit without coming out of the position (eg when trend is likely to continue but you want to take some profit off the table to feel comfortable and secure)
replace the costlier option with cheaper one....
eg assume you bought a BN call of 500 points...it becomes 800 or 900 or 1000.... it would be wise to book it and replace it with current BN call around 500 points.
no doubt, current 500 point call may rise slower than 1000 point call but profits will still keep trickling in if trend continues. the slight reduction in profit may be considered as the cost of insurance for peace and profit booking.
this tactic is like climbing a mountain cliff with progressively hooking oneself to higher harness.
this tactic has 2 more advantages
1. you now have money (out of thin air) to buy more positions if market steps back before resuming the trend.
2. if at all market reverses, you have your initial deployment safe.
of course, this tactic is valid for options only. which i anyways consider best for amateur traders because it is affordable for them and has inbuilt stop loss unlike futures.
also, to add that standard advise, trade with 3 times smaller trade size than you can easily afford. if you trade with small quantity (3 times less than what you can easily afford), you can become fearless trader who doesn't chicken out amid volatility, and who can trade the method till the end of trade's logic.
if your method is right even small trade size will make you rich, sooner than you think. and if your method is wrong, even larger bet size won't help. that will make you poor, that too, sooner than you think....
i know most old traders knew this, even better than this....just thought i should share for new traders. besides, when i write it down, it helps in revision.
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