Buying is easy. Selling is hard.
Yet, most investors think the opposite is true.
They think finding the perfect entry point is the “holy grail.”
Spoiler alert: It’s not.
When and where you sell is the single-most important contributor to your success as a trader.
And that applies to both winning and losing trades.
On the downside, it’s simple – work tight stops and keep your losses small.
It doesn’t matter if your trades only work out 40%-50% of the time…
If you are cutting your losses at -10% each time, you can still achieve extraordinary results.
Don’t believe me?
Tale of Two Traders
Take a look at the win/loss table below, which shows the results of two different traders…
Both made 20 trades – 10 winners and 10 losers.
Both traders had a 23% average gain.
And both traders averaged -10% per loss.
But their net returns are drastically different.
The first trader (left column) lost just 2% on nine out of 10 trades but suffered one major loss.
The second trader (right column) lost 10% every time she was wrong.
The net loss is the same.
But the trader who capped her losses at -10% generated a 168% return.
The other one returned just 15%.
The order of the trades is irrelevant.
You can move them around however you want, and the results will be the same.
This should be an eye-opening moment.
Pop Quiz!
Now, let me ask you another question…
What would produce better results?
Making 100% on 10 trades and losing 50% on 10 trades…
Or making 10% on 10 trades and losing 5% on 10 trades?
It’s not a trick question.
Most people think the result would be the same.
But most people are wrong.
The trader with 100% returns on 10 trades and 50% losses on 10 trades broke even.
The trader with 10% returns and 5% losses produced a 55% return.
And which do you think is easier…
Finding 10 trades that make 10%, or finding 10 trades that return 100%?
It’s a no-brainer.
But most folks don’t realize the power of taking small gains and smaller losses.
Nothing Funny About Money
People laugh at 10% winners.
But no one laughs at a 55% annual return.
Those gains compound quickly.
Yes, you’re reading that right.
$20,000 turns into $1,600,836 in just 10 years.
Can you find 10 winners of 10% each year?
Can you set a 5% stop loss?
If so, that’s all you need to build a seven-figure portfolio.
Try It Yourself
Create your own spreadsheet.
Play with your numbers.
You will be blown away at the results you can achieve by simply avoiding any big losses.
You don’t need a slew of triple-digit winners to see huge growth.
Just be disciplined.
Be consistent.
And keep those losses small.
Trade the Tunnel
Now, if you’re going to start racking up smaller more consistent wins, you need a plan.
And you need a way to find intraday opportunities. For my colleague and expert trader Josh Martinez, this is why he developed his Tunnel Trading strategy.
Utilizing this strategy, Josh has been identifying shorter-term up and down entry and exit levels for profitable trading opportunities along the way as markets eventually move up to their full upper price targets.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
