Here's the secret (seriously)

One of the most challenging aspects of trading and investing is managing your risk.

Everyone talks about it, but no one ever really explains what they mean by it.

And honestly, it’s because most people don’t know how to do it even though they say you need to do it.

It’s the type of YouTube culture we live in today.

I am going to deviate slightly from the content I normally send you and hopefully open the doors for some of you to learn something about arguably the most important part of trading:

How to manage your risk while inside of a winning trade.

If you’d like to watch this on YouTube instead, you can do so by clicking on the video below:

Let me know in the comments on the video if you like the format, pace and content. I’m exploring ways to bring back the podcast to help dive into more educational content.

When most people talk about risk management, they are referring to something like a stop loss.

While stop losses are important, they are not only tool to manage your risk.

Your first line of defense is defining how much you’re willing to risk in a trade through position sizing.

And while it’s one of the most asked questions, it’s highly personal and dependent on the risk tolerance of the trader so I won’t address it here.

I want to talk about how you can manage your risk effectively while you’re already inside of a winning trade.

One of the most redundant questions I am asked is “how do I fix selling my winning trades too early?”

And to that, I have an answer.

Inside of our trading system is a pre-defined process that turns winning trades into risk-free trades.

It’s arguably the most important part of the entire trading system.

And it’s simple.

When swing trading options, you have the luxury of closing half of your winning trade at 100% often.

By selling half of your open position at 100%, you are pulling the principal out of the trade and thus only holding unrealized profits.

This turns your trade risk-free, meaning if the trade does not work, you lose nothing against your account capital.

The only thing you are risking is house money.

George Soros championed this idea in the 1980s and used it in the early 1990s as he famously made over a billion dollars shorting the British Sterling.

By removing your principal from the trade as soon as possible, you can more easily hold the trade through volatile market moves while waiting for the longer trend to continue.

It’s how we were able to trade both RDDT and GOOG today for huge profits.

RDDT closed nearly 42% higher today causing our options contracts to rise over 1,000% in value.

But we were only able to do it by selling half of our position once the trade hit 100%.

Holding through earnings events can be a menace for traders and investors because we have no control over which way the market will react in the short term.

So by closing half of your trade at over 100% prior to earnings, you can hold through the earnings event without risking anything against your account:

Had RDDT sold off after earnings, we would have lost nothing but unrealized profits.

But if RDDT soared after earnings, we were in a position to make a bunch of money.

I call those asymmetrical trades where we have all the upside and virtually zero downside against our account.

And this particular trade ended up being one of our members first 1,000% winner:

We did the exact same thing with our trade on GOOG as well.

GOOG jumped 6.5% at market open, giving us an opportunity to take some profit on the play.

Brian, a 2-year member of TTI, was able to close a portion of his trade at over 400%:

We’re only able to do these types of things because we actively manage our risk as the trade begins to work for us.

I was able to close half of GOOG at over 125% way back October 1st, pulling my principal and a little bit of profit from the trade.

At that point, I just had to wait and let the market do whatever it wanted to do through earnings because I knew even if GOOG responded poorly to earnings I would end up with a profitable trade.

I hate to say “this one simple trick can change everything!” but it really does change the way you think about and interact with risk.

If you suffer from closing your winning trades too early, or you have no system in place at all and find yourself randomly closing “just because”, I encourage you to try to manage your trades the way we do.

Remove your principal from the trade at 100%, turn the trade risk-free, and then let the market do whatever it wants to do.

You will be able to manage it more efficiently knowing it can’t hurt your account if it doesn’t end up working.

It’s one of the first things people who join TTI say improved their performance almost immediately.

So if you’re ready to work on managing your risk and want some guidance on which trades to take..

Next week we’re going to be talking about the best charts we see in the market, including all of the trades we want to take to make November and December the best two months of the year.

If you want to join us for that webinar and you’re not already a member of our research team, you can access everything by clicking here.

Our members get access to daily market updates, all of our trade ideas, weekly web conferences and strategy sessions, and more.

See you tomorrow,

Hamilton

You can follow me for intraday market updates on X by clicking here.

You can follow me for longer-form videos on YouTube by clicking here.