Better System Trader 221: Bad trades, shorting disasters and just get out!
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Jan 31, 2024 Cesar Alvarez, systematic trader and founder of Alvarez Quant Trading, shares hard lessons from his trading career. He explains why you should sometimes just get out of a position and how to train yourself to exit quickly. He warns about shorting disasters, gap risks in biotech, and practical steps to avoid catastrophic losses. He also argues watching the market less can improve discipline and results.
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Just Get Out
- If you find yourself in a position you should not be in, place a market order and exit immediately.
- Avoid trying to split the spread, research the symbol, or day-trade your way out of mistaken entries.
Friend's Wrong-Ticker Disaster
- A trading friend typed the wrong ticker, held after researching and day-trading, then lost more before exiting.
- That experience convinced Cesar to always exit mistaken positions immediately in future.
Codify The Exit Rule
- Write the exit rule into your trading plan and rehearse it so you act without emotion.
- Use simple routines like market or TWAP orders so manual fiddling doesn't derail your discipline.