If youre like everyone else, youve got an online trading account and youre free to move in and out of positions without the input or interruption of a broker. If youre not doing this, we recommend that you do. So when you buy a position, have you determined where you would to sell it if the price would fall? Many traders only think about the price going up they never think about what theyll do if it goes down. You MUST determine this limit BEFORE placing a trade.

We recommend that get out of the position if it drops anywhere from 7% to 10% from where you purchased the stock, option or commodity (or any other market derivative). Yes, it could rebound and take off 100 points after you sale, but it could also drop 100 points and your account would be wiped out. Consider this, if your account drops 50%, then you need a 100% gain to get it back where you were! This is why you MUST place a stop-loss after every trade you place with your broker. Do this without fail IMMEDIATELY after placing a trade with your online broker. Once youve placed a stop-loss level with your online broker, the system will automatically sell your position when that level is reached. Remember, stay in the game until you hit that big trade!