The easiest way to lose money in a market like this is to make money first.
I know how that sounds. Stay with me.
The Dow closed up 600 points today. The S&P printed its first close above 7,300. AMD ripped 17%.
If you're long anything that's working, you feel pretty good right now. You should.
Here's the thing nobody wants to hear when they're up money. Days like this are exactly when traders give it all back.
There's a name for it in behavioral finance, there's data on what it costs you, and the number is uglier than you think.
I teach my members one specific rule that solves it. The math is simple enough to do in your head while the position is running. The hard part is doing it.
The easiest way to lose money in a market like this is to make money first.
I know how that sounds… So stay with me.
I've been doing this long enough to watch the same movie a hundred times. The position runs.
You're up 50%, you're up 100%, you start doing the math on what it could be worth at 200%. You don't sell because you "want to let it work."
Then the tape rolls over and you're staring at a green-going-red P&L thinking how did I let that happen.
The behavioral finance people have a name for it.
They call it the disposition effect.
Fancy term for a really stupid thing humans do, which is sell our winners too early and hold our losers way too long.
It's been studied to death. Every market, every country, every asset class, the same exact bias shows up.
Here's the ugly number I promised you.
According to the most recent DALBAR Quantitative Analysis of Investor Behavior, the average equity investor underperformed the S&P 500 by 848 basis points in 2024.
Over thirty years, the gap between what the index returned and what the average investor actually captured has been more than six full percentage points per year. Six percent. Per year. For three decades.
That's not a stock-picking gap.
That's a position-management gap. People are leaving roughly 15% of their potential returns on the table over every decade because of HOW they handle the trade, not which trade they picked.
The setup was right. The trade worked. They just didn't know when to take the chips off.
I teach my members one rule that closes that gap. I call it 75% of 50%.
When your position is up enough that taking a win actually feels real, you sell half. That's the first 50%. Doesn't matter what happens next.
The trade can reverse all the way back to your entry and you still walk away with money in your pocket from that first sale. The win is locked. Nobody can take it from you.
Then you wait. The position keeps running. You're working with a smaller size, but every dollar you have left is pure upside on a trade you've already won.
When the position hits the next target, you sell 75% of what's left. That's the 75% of 50%. You're now sitting on 12.5% of your original position with zero risk and unlimited upside, and you're playing entirely with house money.
Let me walk you through the math because this is where most people's eyes glaze over and I don't want yours to.
You buy 10 contracts at $1.00 premium each. Each contract represents 100 shares, so $1 premium times 100 shares per contract times 10 contracts puts you in for $1,000 out the door.
The trade runs and the contracts hit $2.00 of premium. You sell half, which is 5 contracts at $2.00. That's $1,000 back in your pocket. Right there, before the trade even hits your real target, you have already pulled your entire original $1,000 off the table. Whatever happens next is pure house money.
The trade keeps running and the contracts hit $3.00. You sell 75% of your remaining 5 contracts. Three-quarters of 5 is roughly 4 (you can sell 4 of the remaining 5, holding 1 back). Four contracts at $3.00 puts another $1,200 in your pocket.
You are now sitting on 1 contract that cost you literally nothing. It could rip to $10. It could go to zero. Either way, you have already pulled $2,200 out of a $1,000 trade and that last contract is pure lottery ticket money on top of the win you already locked in.
That's it. That's the whole rule. Two sales, simple math, plan locked in before the trade ever runs.
The math is the easy part. The hard part is doing it when the moment shows up. The reason it's hard is because you're not making the decision in advance.
You're making it in real time, staring at a green P&L, with adrenaline running, while a voice in your head is whispering "just one more day."
The 75% of 50% rule takes that decision out of your hands at the worst possible moment.
You decided already, before the trade ran. The first sale executes when the position is profitable. The second executes at the next target. The remaining 12.5% rides without any pressure on you, because you've already won.
This matters more right now than at any other point in the cycle and I cannot say that loudly enough.
The S&P just printed a fresh all-time high. AMD just ripped 17% on a single earnings print. The chip super-cycle is firing on every cylinder and the peace deal headlines keep pulling the tape higher.
Anyone who got long early is watching positions run, and the question most of them are asking right now is the wrong question.
The wrong question is "how high can this go." The right question is "what is my plan to take some off."
If you don't have a plan, the bull market will eventually take it back from you. That's what bull markets do. They give traders confidence first. Then they collect.
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Rock On,
Voz