|
|
|
|
|
|
|
additional profit rather than because you want to avoid taking your loss now. |
|
|
|
|
|
|
|
|
Usually a trader takes home overnight positions only because the trader refuses to accept the immediate loss. In my experience, a trader's reluctance to take a quick loss usually results in greater losses and many times can spell disaster for the trader. A small loss soon becomes a large one, and the trader becomes even more reluctant to take the loss. This prescription for disaster has a tendency to feed on itself until the trader may very well be driven out of the business. |
|
|
|
|
|
|
|
|
My point is that traders should never fight the market. By going home "flat," the DAET trader has a sure mechanism for never having an adverse price movement take that trader by surprise during the night. This is truer today than ever before because now most major news releases concerning stocks are reported after the close or before the opening, thereby increasing the potential risk of an overnight calamity. |
|
|
|
|
|
|
|
|
Perhaps the worst problem created by taking home positions that go against the trader is that while suffering the loss (which is bad enough), traders have a tendency to stop constructive trading that would generate profitable trades. Don't put yourself in a position where you are licking your wounds instead of being constructive. Continuing aggregating losses is a terrible situation that will sap your attention and can overwhelm your otherwise good judgment. |
|
|
|
|
|
|
|
|
On rare occasions one might take a position that is really working out well and have the desire to retain that trade overnight because the momentum remains intact going into the close. This is the only case in which I will grudgingly concede that taking home a position might make sense. For example, suppose one buys COMS at 33, by the close of trading it has risen to 36 ½, it seems to be closing very strongly, and the trader wants to hold it overnight because of a belief that it will open even higher. I might be persuaded to concur that this is an acceptable choice, especially if it does open higher the next day. |
|
|
|
|
|
|
|
|
I have been monitoring traders for years, and I can unequivocally say: |
|
|
|
|
|