How To Turn a Losing Trade Into a Winning Trade

Setting an "I'm wrong" level is important when trading to help give you extra protection to make sure you don't lose it all. 

Your "I'm wrong" level is going to depend on what technical analysis you're using. 

In this video, I'm looking at the 10-day moving average of AWK. If you're not using this strategy, your "I'm wrong" level will be different.

Let's take a look at AWK and how to figure out an "I'm wrong" level. 

On August 15, 2022, AWK or American Water Works was in a consolidated flag pattern, but broke out of it. 

This break out could mean we are clear to go higher, so I don't want to see if come back down... if it does, then I'm wrong. 

If it breaks the box, then I'm definitely wrong. 

So I want to set my "I'm wrong" level in the middle of the box. I don't want to watch it come all the way back down to the bottom. 

If it goes to the middle of the box, I know it's time to get out so I don't lose more money. 

If I get out, and then it shoots back up, I can get back in. But I don't want to hold it until it's at the bottom again and lose everything. 

So many people say, "I should have sold a long time ago" when it drops... but think about why you got into the trade in the first place.

You got in because it broke out of the box... if it goes back in the box, then get out. If it stays out of the box, then stay in.

The reason you get in should be the reason you get out. 

To give you an example of a trade I did when utilizing my "I'm wrong" level, I was day trading the SPY on August 15th. 

At 10:16AM I bought 25 puts. I thought we hit the high for the day and were about to sell off. 

At 10:40AM, the SPY ran back up and then hit another low. So far it double topped for the day and is now going lower. 

At 11:44AM, about an hour later, it went back up, hit my "I'm wrong" level and I got out. 

Less than one minute later at 11:45AM, I bought 100 calls of the SPY because the stock was moving up. 

I made my money back and went profitable for the day.

The reason I got into the trade with the put options was because the stock was going down. The second that stock turned around was the moment I needed to get out. 

Are you currently using an "I'm wrong" level? 

Want to learn more about charting and setting your support and resistance values? 

Check us out at Power Trades University.