There's something liberating about cutting your losses and moving on... it's freeing really.
Now, don't get me wrong - I hate, HATE taking losses. I cannot stand admitting when I'm wrong - can't stand it!
There is NO room for pride in the markets. Either admit you're wrong and move on, OR stand in and be a hard-headed idiot - a broke hard-headed idiot!
Trust me, I know of what I speak as I have stood in the face of mounting losses and invited more with my foolish hubris.
Not today people, I was wrong about MO. I set up a June 41/42 credit call spread back on 5/7. I was convinced this stock could NOT keep going up. MO was trading around 40.20 when I put the trade on. I felt confident and SMART! I knew the run was at an end - a pullback was imminent.
I was wrong.
Today I accepted that fate and closed my MO call spread for a $150 loss. With a max loss of $830 I could not allow this play to run against me any further. When you're downside is that high, you can't let these things go against you too long because the losses mount quickly!
Honestly I feel a sense of relief, and a sense of victory. I got over my right to be right, conceded defeat and made the decision to cut and run. It happens to the best of traders. And if I ever want to become a great trader I must learn to cut losses!
Today I did just that.