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Below is a summary of the "Alerts" on stock and option trades issued by John over the past 2 weeks to be "closed out" most near the lows on Thursday 10/13/05 last week and the rest the week prior. 4 option trades also closed out(see 2nd table below) on Thursday 10/13/05. (We still have a few open trades with 3 new positions issued on Friday 10/14/05 that we will discuss in other updates, no new trades from Friday 10/14/05 are listed below). Let's focus on the "sell/cover alerts on this last batch as we often call it.
NOW...this is what happened. Almost immediately after these alerts were issued, I began receiving e-mails asking me a variety of questions with two common themes:
"Why are we taking profits now?" and "What about the target...etc:
I don't understand why we are taking profits before the target has been hit?"
This is more than food for thought. This is a gigantic banquet for hundreds of people on a two week cruise. Probably, it's more than that.
Why are we taking profits now? There are a lot of reasons, including, but not limited to:
Because we have them
Because they are excellent profits
Because an alert was issued to take them
Because you now have more money than you did when you entered these positions
Because the time is right
Because we don't always wait for "target" since targets are hypothetical and profits are real
Because the major reason we trade is to make money
Because we dropped below John's short term target of 1177 $SPX issued weeks in advance (55 point drop in a week) significantly enough to warrant a "clean house" alert (dropped even more rapidly than expected) and let's play it again "that's his reason" if you listened to the Conscious Competence: Update the next day where he goes over this while talking about the next trade he is adding to the portfolio table as a short.
What about this is so difficult to understand? Any of these reasons are as good as the next but when it comes to profit why ask why "just take it"!!
Is there anyone reading this who does not understand one simple fact: We trade to make profits and a profit is a profit? (Fortunately MOST people DO understand see the bottom fold of www.trending123.com for some examples)
So, I got to thinking about why there was so much concern about making money. I will refrain and restrain myself from getting into a long discourse about money and the meaning of life, or the psychological significance of money, or a deeply moving discourse about money.
I am going to deal with what I think happened to just a few people who were confused, challenged and troubled about "why" we were taking profits. It is really a no-brainer, so I don't know why it took me a couple of days to get my mind wrapped around it.
These people did NOT take the alerts.
They waited and then chased.
They saw a target and thought "Wow! We're a long way from that, so I can get in now and ride it up ( or down). Why not just play the last dollar sinse he got the first 5-10 bucks right?
Then, they were not ready for the profit alert. Maybe they just bought in and it was certainly too early, not enough money or maybe even "rat brained" into thinking "John made a mistake" because the position was closed before original "target" was hit.
So- what did these people do? I don't know. Maybe they sold at a smaller profit, maybe they sold at a loss, or maybe they are still holding on and falling down the slippery slope of hope. Who knows? If you do, please tell me.
While most of our subscribers who jumped in and took the alerts ( like the little guy in the cartoon who jumps in with his hands over his head) and then DID NOT CHASE ( like the little guy in the cartoon who is running after the price) and were smiling and playing the money song ( like the little guy in the cartoon at the top), others were just sitting around wondering what all the celebration was about
It doesn't matter what happens to the position after you take profits. Forget it, take it off your screen and move on. The business of trading is serious. It is about making more money than you lose on a consistent and regular basis. The old wall street adage: You never go broke taking a profit is true, and you must learn to trust it and believe it and act on it.
Lesson to be learned: No matter what you have to do, even if you have to train your dog to click the mouse for you, must take the alerts within minutes after they are issued. No matter what...take the alert. Do not hesitate, do not chase, do not sit around and try to figure out if you should or shouldn't take it. Check your emotions at the door, jump in and just do it!!
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