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    You Can Always Buy It Back: One of the Best Trading Lessons I Learned

    A man walks through a capital markets conference, illustrating the trading discipline of exiting a position and knowing you can always buy it back.

    One of the best trading lessons I ever learned is only six words: You can always buy it back.

    It sounds almost too simple, but it changed the way I think about selling.

    When I own a stock that is moving, selling can feel final. If I sell at $1.20 and it goes to $1.50, I can immediately tell myself I made a mistake. That thought can keep me in a trade long after the setup has changed.

    But selling is not the end of my relationship with the stock. I can keep watching it.

    Maybe the stock hits resistance and I take the gain. Then it breaks resistance, confirms the old level as new support and sets up again. Fine. I can buy it again.

    I would rather make a clear exit based on the information I have and re-enter a good setup later than stay trapped in a position because I am afraid of missing what might happen next.

    This is one of the ways I deal with FOMO. I do not need to solve the entire future of the stock in one decision. I need to make the best decision I can about the setup in front of me.

    The same applies to a losing trade. If I cut it and the stock turns around later, I can reassess it. Sometimes it will bounce the moment I sell. That happens. Protecting the downside still matters more to me than being perfectly right about every move.

    It also helps me separate the company from the trade. I can like a company and still exit a trade. I can believe in a long-term story and recognize that the short-term setup I entered has broken down. Those are different games.

    I do not need to sell the exact top. I need to know whether the trade still makes sense. If it does not, I can get out. And if a good setup comes back, I can always buy it back.

    For more, read Why Buying Is Easy and Selling Is Hard, Getting Shaken Out Is Better Than Getting Blown Out, and the cornerstone How I Think About Trading.

    This article is educational only and not investment advice.

    Chad McMillan, creative entrepreneur and strategic advisor
    Chad McMillan

    Chad McMillan is a creative entrepreneur and strategic advisor with over 20 years of experience in and around the capital markets, focused on finding hidden potential in companies, ideas, markets and people, and advancing what they can become.

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