Alan “Ace” Greenberg had a great rule that he mandated on the Bear Stearns trading floor: “If the name is down coming into Friday’s close, it trades.”
He didn’t wait for stops to be hit.
If the prop trader was long and there was an unrealized loss, they sold it before the close on Friday.
This simple, but brilliant rule is one that you might want to employ.
You may have some very strong opinions about what the FRB is doing or that the market is detached from the economy.
You may be theoretically correct on several fronts, but if you’re on the wrong side of the trade from a P&L standpoint, you’re wrong.
Smart people need to keep their egos in check.
By selling your losers and going flat, you have a clear head that night and the rest of the weekend.
Life is good.
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