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Avoid negative open equity

There is an old saying that when day trading positions have had negative open equity most of the day, and an opportunity arises to exit the market at break even with less than 30 minutes of trading rises, go ahead and exit the market. 

Unless the market is moving rapidly in your direction with expanding-in-length bars, and no more than 5 minutes left, exit immediately and consider the opportunity to exit a gift. Day traders are limited by the number of minutes that exist in a trading day and their profit objectives must take this fact into account before trade initiation. It should be extremely rare for you to initiate a day trade with less than fifteen minutes to go before the Close.

Better yet, is to make it a rule to never ride a position having negative open equity. Unless you like to suffer, there is no point in holding a losing position for very long.

Best bet is to exit losing positions as soon as possible, and wait for a more opportune time to reenter the market.

It is so important to learn to quickly jump out of losing positions. It is also extremely important to learn to take something out of a position as soon as you are able. We have had 3 trades in the past two days that made money only because we took something out while we were able. Better something than nothing, and better breakeven than experience a loss. If you sit on losers, you are bound to have them.


Comments 1

Guest - Bishop (website) on Saturday, 11 April 2020 21:06

Nice insight Sir. Thanks for sharing

Nice insight Sir. Thanks for sharing
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Friday, 23 February 2024

Derivative transactions, including futures, are complex and carry a high degree of risk. They are intended for sophisticated investors and are not suitable for everyone. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results, and all of which can adversely affect actual trading results. For more information, see the Risk Disclosure Statement for Futures and Options.