A common challenge for every trader it determining when to take a loss on a trade that is not working in the direction you desire. The biggest part to this challenge is accepting that you were wrong and following through with the rest of the Plan.
Close The Trade.
I had a long position in HRB (H&R Block) going in to earnings (I was playing the 16 level B/O too) and the earnings report was not good. As the stock began to drift down in after hour’s action, I posted this:
No need to over analyze the situation just exit the trade according to your stop parameters and move on. This HRB trade example is a good one to illustrate why -the stock is now testing the 15 level – another .60c down from where I sold.
Keep the losses small.
It is ok to be wrong, just don’t stay wrong.