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Hello Traders,
Greetings!
Mental Stops…..
Every so often I hear clients tell me, ” they don’t use hard stops…they use mental stops”
While the mental stop idea can work 8 out of 10 times, the 1-2 times it does not work will wipe out your account.
Try using mental stops when you were trading crude yesterday and all of a sudden news about Iran looking to comply with production hit the market and market went up over 80 cents in few minutes…
or maybe you had a mental stop on long gold early this morning when all of a sudden in a few minutes gold dropped $14 per contract.
I have seen it happen before with the SP and other stock indices, I have seen it happen in all markets I watch and trade at one time. it’s not a question if, but rather when. Big moves happened and will happen. Not every day, not in every market at the same time but they will happen in all markets at one given time or another.
So unless you have unlimited amounts of risk capital and/ or crystal ball- use hard stops in the system OR learn how to hedge your positions using options and weekly options.
