Here’s What to Do When a Trade Doesn’t Go Your Way

Every day trader has had a moment where they put on a trade with the intent to make profits…

And when it goes the wrong way, you say to yourself “I’m never trading X stock again!”

You ban it from you watchlist and swear it off forever.

Then, once you’re out at a loss, the stock does exactly what you would have wanted it to do.

And instead of being in the trade for a profit, you’re sitting on the sidelines with your thumb in your mouth, wishing that you had gotten back in.

Well, here’s the kicker…

You SHOULD have been in that trade the second time that it did what you wanted.

Why?

Because you never give up on a stock that you know is going to do what you want it to.

Let’s take today’s example of LI Auto (LI) to show you what I mean…

There were a slew of stocks out there today that you could have targeted today, and LI was the one that we chose to follow in the Warlock’s World today.

LI was doing everything right to set up for a perfect short today: It reported earnings, the stock was gapped up, and it had volume.

So out of the gate, we had a plan. If LI broke $24.30, we were shorting it and were going to make money off its move downward.

$24.10 got you $23.95 before the stock decide to bounce back and stop us out. As you can see in the chart below.

Playing this quickly you could have gotten out with a small loss, or even a small profit if you were tight enough with your stops.

But once I saw it sell off back below the VWAP immediately, I knew that the shorts were still in control.

So I yelled to my members to get back In for a second trade in LI as shown by the last circle in the image above.

I often say “If a stock doesn’t want to die, it’s a buy.” And that quote can be applied to shorting as well, but just the opposite.

LI didn’t want to blast off to new highs through the VWAP. So, when it continued to stay below the VWAP, I knew that it would be a good entry to try our hand at shorting it again.

And it paid off…

Our second entry at $24.05 turned a profit of almost $1.00 a share as LI sank all the way down to $23.07.

1000 shares with a $1.00 profit is a quick $1000 for the day — all in just the first thirty minutes of the day.

Setting your risk on this trade meant that you could have had ten of those first trade losses to equal the winner that we got on the second attempt.

Remember, you always want to make sure your risk-reward is in your favor.

That means you want to be able to make a dozen mistakes, and have that one winner cancel all of those mistakes out.

It’s how we make money.

This week, there will be plenty of more chances to make money off earnings reports like LI.

Just go here to get your earnings reports, write down the ones you want to follow for each day, and come in every day with an idea.

I’ll see you soon.

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