Thoughts on a Sunday Afternoon, July 11, 2021

A different way to think about being stopped out of trades?

I heard another professional trader say something this week that I have never heard before, but that resonated deeply with me immediately. The trader stated that “stop-outs” and fees are nothing more than the overhead of a professional trading business. I will never forget this statement – I have known this truth for decades but never heard it phrased this way.

Trading for me is a business. Businesses have overhead expenses. Some businesses operate a fleet of trucks, have expensive computer networks or operate manufacturing plants and office buildings. I have none of these things. What I have are trades that I cut short to prevent large losses.

Being stopped out of trades is my business overhead.