The myth of the pain threshold

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An SMB Trader during his daily review wrote:

Today was definitely a day to really pick your spots for initiating trades. I think for the most
part I selected the right stocks today but just had trouble managing some of the trades namely in
FB and FAST. Something I thought about today after getting stopped out of a FB short before
it broke down was that I noticed I don’t have a very high pain threshold for the most part. I then
started to wonder if that quality is a merit or a flaw when it comes to trading. On the one hand it
always keeps me in the game for the whole trading day since I never sustain a rip or two that’s so
bad it stop me out for the day. However, I feel like it does prevent me from crushing some the
bigger picture plays that take a bit more time to play out before you get paid on them. I want to

play to my strengths but still be able to push myself out of my comfort zone. Thoughts?

Bella responds via email

I am not a fan of the pain threshold if you define that as expanding your stops.

However I am a fan of you understanding when to take your loss but then keep watching the stock
AND developing a plan for reentry
For example I do not like holding FAZ all the way down to the whole when our stop was 14c (see chart below)
But I do like getting back in to FAZ if it is holding above 20c again
One play is you fighting the trend and hoping and wishing and praying that a stock trending against you reverses.
I do not like those odds.
You do not make a career making these types of trades.
the other is you using an important intraday support level and not trading against the trend
does this make sense?


no relevant positions

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