An effective trading technique to help limit unnecessary trading losses

We were sitting in our training room in NYC, during our daily 11AM mentoring session, and a new trader reviewing his open said, “I should have moved on from the stock.”  It doesn’t really matter what the stock was or the setup, as this statement has been heard on trading desks since the beginning of trading.  The new trader didn’t make much of his trading utterance and kept sharing his underperformance in the one name.

With my recently reset broken nose in a full splint, I chimed in.  Admittedly, it may have been a bit hard to take me seriously in such a state.  But this was an important moment to get right for this trader and one that many don’t.

This was an excellent job by the young trader spotting an area of improvement.  But what was lacking was a solution for this failure to move on.

Do you ever trade a stock and regrettably fail to move on?  Do you ever review your day and lament how if you moved on from a bad stock your day would have been much more profitable?

Specifically, the new trader (and maybe you?) needed to follow up his observation with the specific solution for him to move on from such a lousy stock.  What would be this trader’s system that would trigger the necessity for him to move on from this stock?

I suggested some examples (there are others) of when this trader might move on:

a) 3 losing trades, then move on

b) trade thesis wrong after 10:15AM, then move on

c) the stock was not moving, then move on

It is good work to identify in review that you should have moved on from the stock you were trading.  It is better to have a system, developed by you- that makes sense to you, that when triggered signals it is time for you to move on from the stock you are trading.  Doing so will help you keep more of your profits from your winning trades, and limit unnecessary losses in those inevitable lousy stocks you will run into.

*no relevant positions