The market has a way of forcing you to face the music. When positions start to weigh on your portfolio, you’ve got to pivot fast.
I’ve seen too many trades where people let painful positions stick around, dragging down overall performance. It’s time we talk about how to realign our portfolios by exiting those account-crushers before they tighten their grip.
Assessing the Pain
It’s no secret that setbacks happen. Recently, I watched key holdings crumble and realized that hanging on only adds to the pain.
Whether it’s an underperforming stock like Apple (AAPL) or a sector ETF such as Consumer Discretionary (XLY) that’s lost its luster, you need to assess the damage regularly.
Ask yourself…
Is this position doomed to further losses, or can it bounce back?
If the fundamentals have shifted and technical indicators signal distress, it may be time to cut it loose and take the ‘L.’
Avoid the trap of doubling down just to average down — that tactic might lead you further into trouble.
Even if it works, how long does it take to get your money back? Would that capital be best used on positions that could outperform instead of languishing in a stock that’s struggling?
Exiting painful positions isn’t a sign of defeat — it’s a strategic move to free up capital for better opportunities.
Taking Action
Once you’ve made the decision to exit, act swiftly. A well-planned exit strategy is crucial, especially in volatile markets. Dragging your heels only amplifies your losses.
Whether you’re dealing with a hefty drawdown in tech stocks like Microsoft (MSFT), or facing broader market weakness across Financials (XLF), getting out quickly can be the best course of action.
As you close these positions, reallocate your freed-up capital wisely. Look for areas showing promise.
This realignment not only protects your portfolio but also positions you to take advantage of a market recovery when it comes. Stay focused on your trading plan and risk-management goals — the market waits for no one.
Realigning your portfolio is a process every trader must face at some point. Discipline, smart decision-making, and a willingness to adapt to market conditions are the keys to cutting losses and moving on.
Stay alert and adjust your positions as needed. The decisive trader is the one who knows when to cut losses — and that can make all the difference.
I’ll see you in the markets.
Chris Pulver
Chris Pulver Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
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