Options are an excellent tool for risk management, not just speculation. When you have a high-conviction view that feels almost certain (e.g., "there is no way they'll hike"), buying options instead of taking a large vanilla position can protect the portfolio from a complete wipeout if your seemingly infallible view is wrong.

The optimal exit point for a discretionary trade isn't determined by valuation metrics, but by market psychology. The signal is when investors betting against the trend are experiencing maximum financial and emotional pain, an intuitive skill that cannot be codified into a system.

The best macro traders (Jones, Druckenmiller, Soros) are defined by their ability to discard a viewpoint the moment facts change, rather than defending it out of ego. This intellectual flexibility is crucial for survival and success, as clinging to a wrong idea is a far greater error than admitting a mistake.

To avoid emotional, performance-chasing mistakes, write down your selling criteria in advance and intentionally exclude recent performance from the list. This forces a focus on more rational reasons, such as a broken investment thesis, manager changes, excessive fees, or shifting personal goals, thereby preventing reactionary decisions based on market noise.

To manage the risk of volatile or 'bubble' stocks, investors should systematically take profits until their original cost basis is recovered. After this point, any remaining shares represent 'house money.' This simple mechanical rule removes emotion and protects principal while allowing for continued upside exposure.

True investment maturity isn't about holding through drawdowns. It's about recognizing when new information invalidates your thesis and selling immediately. The common instinct to defend a position by buying more is a costly mistake that turns event-driven plays into distressed holdings.

Suboptimal selling is often driven by fear: a position gets "too big" or you want to lock in gains. A better approach is to only sell when you find a new investment you "love" more. This forces a positive, opportunity-cost framework rather than a negative, fear-based one, letting winners run.

According to investor Howard Marks, people sell assets either because they're up (to lock in gains) or down (out of panic). Both are poor reasons. The only valid reasons to sell are if your original investment thesis is no longer true, or if you've found a demonstrably better opportunity.

To survive long-term, systematic trading models should be designed to be more sensitive when exiting a trade than when entering. Avoiding a leveraged liquidity cascade by selling near the top is far more critical for capital preservation than buying the exact bottom.