Tuesday, October 14, 2014

What to do with a position when you are confused?

Many a times, we as traders are stuck in a position, and do not understand what to do. There often comes a time when we undergo total confusion of whether to carry a position, or to liquidate it. Especially during choppy times, when on one day, markets correct as if there was no bull run, and the next day rally as if there was no correction the previous day. In such times, many a times, our positions neither hit their stops, nor targets, if put generously. This indicates choppiness in the markets.

Michael Marcus, a commodities trader, who, in less than 20 years, is known to have turned his initial $30,000 into $80 million, makes the point clear for us. He believes that when you are confused about what to do with a position, getting out is the best way to gain clarity. "When in doubt, get out and get a good night's sleep. I have done that lots of times and the next day everything was clear. While you are in a position, you can't think. When you get out, then you can think clearly again."

Nice point to ponder, isn't it?

1 comment:

Tomy Xavier said...

An outsider can see many many opportunities in a real game (chess,card games etc). After a tough examination, students often wonder why they missed out so many easy ones. The same applies to trading. After Getting out of positions, one sees opportunities clearly. Seeing opportunities and conviction while in the game is the challenge; that is accomplished by talent + coolness + knowledge combined. Tuning the human machine!!!