Good morning, traders…
You call the chart direction perfectly. The stock does exactly what you predicted.
And you end up in the red anyway.
Sound familiar?
Being “right” and making money are two completely different animals. Especially with options.
You can be 100% correct about the direction, the timing, and the catalyst — and still lose money.
Nail the thesis, predict the exact move, and watch it play out in front of you … but if your execution is wrong, you lose.
People love to be correct, to make a bold prediction and see it play out in real time.
It validates your intelligence. You feel smarter than others, like you have a special insight they don’t.
And being right publicly (telling friends, posting on social media, bragging in trading groups) elevates your status. You become “the person who called it,” which bolsters our basic human need for social validation.
You’re feeding your ego instead of growing your brokerage account.
But trading isn’t a popularity contest. Nor is it a game of crystal ball predictions.
While a clairvoyant vision might get you into the trade … it won’t execute the exits for you.
Being right doesn’t pay the bills. Making money does.
Yet many traders don’t seem to understand this. They’re under the false impression that, as long as they’re “right,” the gains will magically appear.
There’s a huge difference between a correct prediction and a winning trade.
Where Traders Confuse Being Right With Making Money
There are a few common scenarios that lead to this confusion…
- You predicted the earnings beat, but IV crush killed your calls.
The stock beats earnings by 10%. You bought calls the day before. The stock gaps up 5% at the open, and your calls are down 30% because implied volatility collapsed overnight. You were right about earnings. You lost money because you didn’t account for IV.
- You nailed the entry level, but you had no exit plan.
The stock pulls back to your exact buy zone. You enter. Then it rips 20% in two days. You hold for more gains. The stock gives it all back, and you exit at breakeven. You were right about the entry … but you made zero dollars because you didn’t take profits.
- You identified the breakout, but you chased it.
The stock breaks above resistance exactly where you said it would. You chase the move 5% above the breakout level (instead of waiting for a pullback). The stock consolidates for three days, and time decay eats your short-dated options. You were right about the breakout. You lost money because you chased instead of waiting.
- You predicted the direction, but you bought the wrong expiration.
The stock moves 15% over three weeks, exactly as you predicted. You bought options with 7 days to expiration. The stock moves slowly at first. Time decay crushes you. You exit at a loss before the big move happens. You were right about the direction. You lost money because you didn’t give yourself time.
The 5 Factors That Determine Your Gains
Profitable trading comes down to executing consistently in five specific areas:
Entry Timing
You can be right about a stock going higher, but if you chase instead of waiting for a pullback, you might get stuck holding the bag. Patience with entries is more valuable than being right about direction.
Position Sizing
You can be right about the trade, but if you go all-in and the stock pulls back 5% before it moves your direction, your account gets demolished. Size your positions carefully.
Contract Selection
You can be right about the stock moving 10% in two weeks, but if you buy contracts with 3 days to expiration, time decay kills you before the move happens. Buying the right expiration date matters more than predicting the move. Selectivity is your superpower.
Exit Discipline
You can be right about a stock going higher, but if you don’t take profit when it hits your target, you’re gambling on being even more right. Lock in gains. Exit with precision, don’t hold for perfection.
Risk Management
You can be right about 9 out of 10 trades, but if you let that one loser wipe out your account, you’re done. You can survive bad luck with proper risk management … but you cannot survive bad risk management, even with spectacular luck.
Start Prioritizing The Important Part
If you’re trading to prove you’re smarter than the market, you’re going to lose.
Your ego doesn’t pay your bills. Calling the exact top or bottom doesn’t show up in your account balance. Predicting the move three days before it happened doesn’t matter if you don’t keep your gains.
The only thing that shows up in your account is whether you executed correctly when the opportunity presented itself.
I know a trader who can analyze charts better than anyone I’ve met. He’s a wizard of technical analysis who understands every common chart pattern, indicator, and catalyst.
Yet he’s a barely breakeven trader.
Why? Because his execution is sloppy. He enters too early to prove he “saw it first.” He holds too long to prove he was right about the bigger move. He oversizes positions to prove he has conviction.
He prioritizes being right over making money.
Being right is a dopamine hit. Being a profitable trader is life-changing.
Choose which one you’re trading for. You can’t have both.
Stop trying to call every move. Stop holding for perfection. Stop trading for bragging rights.
Execute your plan, protect your capital, and take your gains while they’re still there.
Don’t trade to be right … trade to make money.
Just like the great Ethan Harms did LIVE during last Thursday’s Smart Money Workshop…
He called out a lotto setup on QuantumScape Corp. (NYSE: QS).
He knew his price target, stuck to his plan, and prioritized gains for a 400% overnight banger.*
Don’t miss the next 5x slam-dunk…*
Happy trading,
Ben Sturgill
*Past performance does not indicate future results. Not Typical
