O'Reilly logo

The PlayBook: An Inside Look at How to Think Like a Professional Trader by Mike Bellafiore

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

3. The Day Knight Capital Almost Fell (A Support Play)

This chapter reviews Shark’s Support Trade in Knight Capital, right after their infamous monster trading loss. But first we need to do one more thing. We must explain a Reason2Sell, an exit strategy for winning trades. This concept is discussed in this setup and prominently throughout the book. It will help you write personal trading rules to best exit your profitable positions.

Have you ever cut your winners too early only to see the position trade much higher? Of course you have. How about hang on to winners too long only to see your unrealized gains evaporate as the position reverses? You are not alone. British economist Sir Alec Cairncross lyricized our dilemma best:

A trend is a trend ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required