Cashflow Your Trades
Try this trade tactic
Do you find yourself often getting the first ‘pulse’ of a move, yet the broader trade often doesn’t play out?
Maybe it’s better with a visual example…
- You spotted the S&D shift and picked up a long
- You were looking for a mean reversion play back up to that key level
- The market got a 5-minute bid and then rolled over to stop you out
In other words, you are pretty good at calling the initial turn, but that edge seems to disappear over the broader move.
It’s frustrating because you see a nice green unrealised P&L at first, only to see it come back and stop you out.
This is actually super common, and a few Traders Mastermind members (Best community on the planet, shameless plug…) have recently flagged this up as a challenge.
Here’s a potential solution:
Cash flow the trade.
Huh?
You leverage your advantage by peeling some of the position off into that initial move.
So, lets say you’re pretty good at spotting this turn and often get that primary pop. You sell some of your position into that pop.
Then, keep the rest to play out as planned.
You can even add more size in anticipation of this strategy.
One way to frame it is to think of this almost like de-risking your trade.
By leveraging on your ability to spot 1 – 5 min moves, you can pay yourself for that advantage and that then covers the risk on the broader move (or at least trims it back.)
Does that make sense?
Hopefully it does…
Anyway, I uploaded a podcast episode discussing this if you want to take a listen. (Yeah yeah I know I said I was taking a break from episodes, I did for a bit… and this is such a good tactic IMO I had to talk about it.)
Something to think about… (No advice and all that, it’s got to be your call.)