Elliott Wave Options: Pro Trader Tip: Follow Your Trading Plan and Manage Your Losses!

The market uptrend has slowed down in recent weeks. For traders, that may mean that it’s time to shift strategies. That could include adjusting your specific trading plan to a more neutral market over the coming weeks.

Part of any investment plan is to contend with losses. While an inevitable part of investing, managing losses is crucial. That keeps investors from blowing up a portfolio, and keeping the capital needed to prosper.

First, traders can avoid losses by having the patience to wait for the right setup. Traders who try to  get into a trade in a shifting market may not get the ideal price. By paying the wrong price going in, traders may make it more difficult to make a profit.

Second, traders should give themselves more time for a trade to play out. With many investors flocking to day trading, adding in an extra day can help reduce or avoid losses.

Next, investors should look to take trades off the table when they aren’t performing as expected. This can keep trading losses to a minimum.

And, once a trade has been closed, traders should look to the next trade with a neutral eye and not look to “catch up” from any short-term loss. Doing so could lead to making riskier trades.

To look at a real-world example of managing a loss, click here.