Managing Trades That Don't Go Your Way

Let's get real about trading. While it's great when a trade setup plays out beautifully, not all of them will -- and when that happens, you have to manage those trades. In particular, you most certainly need to be willing to ditch the ones that aren't playing out as planned or expected. When it comes to winners, of course, you need to hang on and either wait for your target to be met or to use a trailing stop as a means of letting the market tell you when to exit. You could also employ a combination of the two -- that is, exiting partial positions at a target and trailing a stop on the balance.

My favorite setup uses what I call a Fibonacci price cluster. This is when we can identify a minimum of three Fibonacci price relationships that come together within a relatively tight range. Many times I will find up to 10 such price relationships. Still, when we use these, sometimes we'll hit a home run and other times we'll strike out entirely. Not all of these setups will make you money. But the risk-reward parameters are pretty healthy on these -- so, if you manage them correctly overall, you should end up a winner....250 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.