Hey everyone, I’ve been trading options for a while now and finally found a strategy that suits me. However, I’m struggling with one key aspect: knowing when to hold onto a trade. I often spot great setups on $SPY, but I tend to exit early, even after trimming, because I lost over $100k when I first started.
I’ve recently become consistently profitable over the past few months, but I still cut my trades short at 20-30% gains instead of holding for more. Most of these trades often go beyond 100%, and some even hit 1000%. My biggest issue is that I get spooked by pullbacks. If you know $SPY, it’ll sometimes drop $1-$2, do a wick, and then recover before the candle even closes. With all the market manipulation this year, I hesitate to hold for longer.
How do you gain the confidence to hold through those pullbacks? Any advice would be greatly appreciated. Thanks!
How do you gain confidence holding a trade?
byu/Tipsyus inwallstreetbets
Posted by Tipsyus
34 Comments
how often are you jerking off?
When there’s a bullish day buy some puts that expire 3-4 months out to hedge against a big correction you never want to assume it’s only ever gonna be a bull or bear market and on bullish days buy puts and bearish days buy calls this is how you can have strangles, straddles, butterfly’s, condors, etc. for a discount essentially
its all just gambling. If u want to be confident, u do investment.
What time scale are you trading/holding on? I’d look for a way to slow down the exit and give you a minute to see it’s ok.
My suggestion is to write down a few exit rules. Like a x% drop sustained for y minutes, OR a 2x drop. Obviously whatever rules you choose must be tailored to your strategy.
Small bets. Cash out when you get a gain. Don’t get greedy.
Baseball analogy:
It’s better to be safe(-ish) and get on 1st base 90% of the time than to swing for the fences every time and strike out 90% of the time.
In other words: Leave the strikeouts to others.
Also- People lie. There are a lot more people losing on big trades than winning. There are a lot more people doing slow/steady trades who male money.
It’s not as exciting, but it does move the needle up over time.
Getting burnt for 100k is telling. Hitting 100% is great but can you afford for it to expire worthless? If so then try holding to 50% profit and cash out until you get your nerves and emotions under control. Then it’ll be easier to hold during the dips while you wait for higher returns. Remember that nothing is fool proof and what may seem like a temporary pull back may last longer than you expect. You can also pull out profit at 20% so you won’t walk away empty handed but obviously this will reduce future gains.
Maybe set a stop loss that goes up as you make a profit, or you could sell a percentage of your contracts at certain profit levels. For example have sell 50% of your contracts when you hit 50% profit, 25% when you hit 75% profit, and the remaining 25% when you hit 100% profit. You could also try to trade on paper simultaneously to see how good your analysis is in regards to figuring out when it’s time to buy or sell.
Think about it this way:
If you take profit now, you will have a little extra cash. Tomorrow, you’ll bet it all again and possibly lose it all. So… why not just hold now if you’re going to risk losing it all again tomorrow?
Not financial advice.
I tell my dad I need to sell right now and he tells me “nah ima do my own thing” and doesn’t let me sell
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Think about exiting in waves. At 20-30% close some % of your position. Then, close another chunk at 50% gain or 75%. Then finally close everything at 100 or 200%. Obviously you’ll want to risk manage as well so if you’re at 60% gain and you don’t like the price action just close whatever is left. But the idea is the basically have a strategy for taking gains and stick to it. Ideally after the first 20-30% you close enough to be able to avoid that ever being a losing trade. Then have kind of have pure upside.
Well, this depends on how often the trades run higher. Or what it ranges at once it goes over your
Depending on that, you can probably do a ratio.
For example, let assume you buy two contracts at 1.00. If the price runs up to 1.30, you exit one contract to take the 30% gain. And for the second contract, you can choose to set a stop of 0.70. This will make the trade a breakeven(not including commissions).
Depending on how confident you are, you can choose to set the stop at 0.8, 1.0, 1.1,etc. All of them will give you a different pnl. So, the main thing here would be assessing how confident you are.
The purpose of the first contract is basically to give you room for bigger moves if it’s possible.
Scale up as needed.
Alternatively, and I’m paraphrasing here, “git gud”. Fine tune the setups your spot and set up extra trading rules to justify your exit at 30%,50%, etc.
If the stock movement only complies with enough rules for a 20% exit.. then exit at 20%.. and so on.
By it being profitable and directional and not simply unprofitable / profitable because of shit tons of leverage
Have a trade journal. It forces you to be reflective. I realized that I sold a put too soon based off a fake out.
I would have made a lot. I expected it to hit $17. That’s exactly what the stock did. It hit $17 and has been floating there a couple days.
In fact there were 2 or 3 fake outs that would have made me sell.
FML.
Now I know better.
Stop looking at charts all day long. Do it only during Power Hour, when the 1d candle is +- consolidated
You find someone else doing worse than you.
You are looking at your trades like an old girlfriend you regret breaking up with, at 30% gain you can sell half, and let the rest ride if there is some momentum…unless there is some market news coming what is spy really going to do after 11am with a stable vix? sell it and dont look back..You are still getting caught up on max gains…remember how you lost that first 100k. usually when it hits a stagnant point and there is no momentum, you are pretty much waiting for it to drop. getting 30-50% gain and getting out is a great strategy.
You don’t learn or gain “confidence holding a trade”….you learn proper risk management and that involves taking small losses and cutting winners early sometimes. You are almost never going to time top and bottom perfectly. Be content with it.
Have confidence in your set up if you’re buying 2 contracts at a time sell 1 at 100% let the other run. If you’re on a bigger scale just sell half at 100% then it’s a free trade if you lose well you lose bigger but if you win you win even bigger. You can only lose 100% of your money but when you gamble you can make unlimited
If you’re consistently getting 20-30% gains I’d just keep steering that ship forward and steady!
Get to greedy and you’ll be posting loss porn.
Imo
Having a stop loss helps
Desensitize yourself to the loss and gain of money in the short term. Stick to your methods and shrug off things. Helps me alot. Saw myself -2k this week at one point and said well fuck it guess im going down with the ship. It turned around.
You called my situation out spot on!!!
I use meth when I trade and also on the off days, really helps with confidence, although not so much with sleep, so there is a trade off
Check my positions every 45 seconds
take small bets that you can handle losing 100% of and youll be more comfortable letting it ride. also dont feel fomo. making money even if its $50 is better than losing
Obligatory *Nobody ever went broke taking profits*.
You’re profitable, don’t overthink it.
Hindsight is always 20/20. A 30% gain is essentially 3 years worth of SPY returns, so the fact you want more is a clear sign you’re wanting to gamble more than invest, and that always ends well… right?
Quit being a puss , is the 1st step
I take a good long gander at my donger
dead inside
Well you see ancients such as me used to read about company financials and future prospects and use those to gauge whether or not we would buy and hold or sell and reposition but that shit is just gae so I don’t know
Confidently holding comes down to a few things. Keeping your position size correct. So that you aren’t terrified of pullbacks. And playing your thesis correctly. Have your levels ready before you enter a trade. Both where you expect it to go. And where it’s clearly going the wrong direction. So that you know when to cut. Scaling in and or out of a position also helps. I had 4 NVDA 102p yesterday for example. Bought at. 25. I sold 2 at .40. Taking off most of my risk. And leaving 2 to go for my thesis. Then I sold 1 more at .50. Gaurenting me a 30% profit. While still leaving a final runner that I held to .75.
No one has lost 100k taking profits.