When Should You Stop Trading? (The Golden Rule...)

If you want to be a successful day trader and make consistent money online trading stocks, you need to have some basic rules within your stock trading strategy. One of these rules is the ability to realize when you need to stop trading. This may seem a bit backwards given we need to trade as day traders in order to make money; however, at times continuing to trade can do more harm than good. I recently had a situation within my personal trading where I put myself in the position of needing to stop trading and walk away. Admitting that you need to stop trading is not pleasant, but it is a rule you must have as a trader and is an objective you need to learn about when you are new and just getting started in the stock market. I use a real life example to illustrate my point, so let's get to it!

[MrCbell]

I’m so impressed with your knowledge. As well as your desire and persistence to share information here daily with so many. Thank you.

[lowSO]

love the psychology behind the trading! profit is profit ! love it

[bishopjharper]

Clay, very good video. I have been there and I really appreciate your transparency for it has given me comfort to let me know that I’m not alone. I will incorporate the rule and make it the golden rule from this point on knowing that this should be a part of the trading strategy. Stop! Drop! WalkAway!

[channkrp]

Self-awareness is part of the setup too, even more important long-term. Great video.

[talkimaliki]

Currently trading micros at day/night, well one night I pull up the screen and it’s tanking. instead of hearing the voices of forming a game plan, the “it’s going to zero!” “Get in now!” Voices were very loud. I wrestled with this (felt like forever) 10-15min. Before just shutting down the screen and going to bed. Also yes, it drop 30+ points but CHASING instead of logical Entry’s /Exits is not good long term behavior. Actually felt great the next day reset/refocused. Thanks Clay great vid!

[justinselph]

This is virtually every trade. Maybe not at that extent, but basically almost every trade is more profitable than what the trader actually pulls out of it. It’s impossible to know the max profit entries or exits of any trade. It does sting to see the missed opportunities though!

Great video, great advice! I enjoy them all.

Just curious, do you track your trade win %? And do you trade futures much at all?

[waikikinz]

Know your limits ! That's the best piece of advice. The most difficult part of trading is that each position you take is a risky move. Whatever happens, you could be on a winning strike of 10 wins and then because of some factors you could mess up and lose everything you did before. So, know your limits ! If you feel tired, angry, hungry, upset... Stop trading, go out, have a walk, a nice dinner... Don't insist ! Because if you try so you would fall bluntly in the overtrading... Risk all and lose all.

[danharmon]

Do your best to be Mentally and Emotionally prepared!
Always a good idea.
P.S. I would have been pissed off about that $15, 000 too.

[thatwhiteguy]

Mind blowing!!!
Hahaha
It listens to your videos on the way to work raggedy factory job.
Gets me pumped up to exit and vacate loser status.
If a stock has been around for a while, future seems good and it fluctuates often then couldn't you just hang in there until it eventually goes back up.
I could see getting out asap with shady or penny stocks.
Stay or go? Pro's and cons with both decisions.
Weigh the risks I guess.
What you're saying reminds me of a good quote...
"Never make a decision if you're sad, angry or in Love".
It's like construction, sometimes it gets frustrating. You stop thinking right and screwing up. So the best thing to do step back, chill for a minute, relax and then come back to it and it'll look different and you'll have a different, calmer mindset.

[alimirza]

Hey clay just watched your video. Just wanted to say I've been self aware since I was around 15 yrs old, always stepping outside of myself and reflecting on my behaviour and social interaction on a daily basis. I would have also walked away because I done get paid £500 per day so it's always a bonus ... Well done. U can always come back another day to fight again ...

[haun]

@claytrader really good video, enjoyed it a lot, thanx man. Just wondering do u have a physiological things u do before u trade e.g going over the displines of trading?

[redshoes]

Thanks Clay for posting this video. I am really struggling with this issue and it is really costing me substantially not only financially, but my failure to make right/correct trading decisions has created self doubt on all fronts. I engage in self awareness and understand my habits however I seem to not be able to break the habit. For example I traded AMZN the other day I made a nice profit however I failed to get out sooner and as a result I loss part of my profit ($20, 000) because of the down turn. In the aftermarket AMZN went to 2, 133, however I was in options and could not trade so when it closed at 2, 030 and opened the next day at 2, 055 my exit strategy was to get out at 2, 100. Like a frog in a boiling pot waiting for 2, 100 it closed at 2, 008. I am ashamed to admit it but I sat and watched this travesty but held on to the belief that it would go back up to 2, 100, to at least 2, 050, or at least 2, 030 as it continued to fall and I failed to get out until 2, 008. I ask myself is this based in failure to get out because I know the true value or is this greed. Why did I stay in Clay? I am so upset with myself. I have repeated this habit numerous times. Please suggest some type of strategy to save me from myself.

[richardbernsee]

You are right. Do not trade when you are flustered. That part I don't understand is why you were flustered. You could have just as easily lost 15 grand by staying in too long. When you have big money in you are better off to err on the side of caution then risk getting your ask kicked in a big way.

[jeffrey-is-Rook]

Absolutely. Just 2 weeks ago I made a trade and closed for small winner about 15 seconds before it ran up and halted not once but twice. Easily could've doubled my entire account but I saw my exit criteria and got out. No rules broken but missed out big time.

[KrissHermusReiningHorsesPlus]

Bro, this video comes just at the right time for me! This has happened to me before where you post a video that I can totally relate to on my previous trading day. I was up 18% on my account scalping the Dow and Nasdaq futures on Friday. It was 2:30PM and I was like, ok let's be done for the day and enjoy the weekend. But then I got this crazy feeling of overly self-confidence, and I thought the markets were going to bounce. Long story short, I went from up 18% on the day, to down 35%!!! I got all stuck in this circle of where I couldn't admit being wrong, and threw all my rules out the window for it. I thought I was going to make a killing trade, well a killer it was, killing 1/3 of my account that is.

When you talked about our habits and tendencies, and especially self-awareness, I imidiately thought back about that moment of overly self-confidence just a minute or so before I entered into the suicide trade I took. Eventually I got out, because I just couldn't take the bleeding anymore. Which was good, because I could've lost about 70% or so, but still it's just ruined my weekend.

Thank you for sharing Clay, always enjoy watching your videos!!!

[daveyhen]

Traded codx the other day, bought at 2.90 in the morning and cut my losses when it dipped down to 2.70. Took the hit and i moved on. Later at 3:30pm it went up to 3.50! I was gutted. I need to be more patient I guess.

[Redrios]

"golden Rule" is part of Theory. The concepts used are part of the Theoretical Framework. We could say that this video is about Practice, concrete activities and not Theory (be it Research or Study, or even mental experiment)

[barton]

Had stock in SPCE on Friday. Got in at $17 and moved my stop loss just a few cents too high and got cashed out at $17.25. The price then went up to 17.80 and I didn’t follow the golden rule and continued to trade to make up for the money I missed out on. Ended up in the red for the day.

[azizmurotov]

I got a question.
Do you generally pay taxes on dividend stocks?
Or are they just considered as capital gains?

[corey]

This happened to me today.. I had a chance for an extra $100 in profits but went flat on a position. The stock dropped $4 after I exited (I was long so I dodged a bullet).. We dont know what the market is going to do even with us being technicians. What I've noticed is that when I follow my strategy and hit my daily goal and the stock continues.. I feel the emotions come in (you know the hindsight emotions that kick in? LOL).. But when I back track.. there were a ton of days my strategy helped me dodge bullets.. As long as I meet my daily goal.. and the stocks continues higher I am ok.. What I cant take is hitting my daily goal and then watching myself give back all my profits because I've decided to be greedy or let past hindsight memories encourage bad decisions such as breaking rules.