One of the biggest mistakes we see with traders and investors is this:
They have no game-plan.
This is one of the most, if not the most important element in trading and you should not be trading without one.
When you have a game plan, it allows you to get in and out of the market in a non-emotional way.
So often we see traders jump into markets based on emotion, investment show ideas, or rumors. This is the worst possible way to trade and the quickest way to lose money.
There's nothing more important to have than a game plan to enter and exit positions in the markets.
By creating a game plan, you are setting yourself up emotionally to handle anything that happens in the market. Having a successful game plan complete with an exit and money management strategy is enormously important.
With the kind of volatility that we are seeing in the markets today, not having a game plan is like financial suicide and that is something that you don't want to do.
This is one of the most, if not the most important element in trading, and you should not be trading without one.
When you have a game-plan it allows you to get in and out of the market in a non-emotional way.
So often we see traders jump into markets based on emotion, investment show ideas, or rumors. This is the worst possible way to trade and the quickest way to lose money.
HERE'S HOW TO GET STARTED
Creating a game plan is very easy and you can do in a matter of minutes. Here are the 5 KEY STEPS:
STEP 1: Write down your reasons for buying or selling a particular market.
STEP 2: Write down your entry points for the market you’re about to trade.
STEP 3: Write down when you are going to exit this market. This can be with a stop or when a market reaches a pre-determined target zone.
STEP 4: Do not make market decisions during trading hours.
STEP 5: Review your game plan every day to see whether things are going according to what you expect. This allows you to adjust your money management stops and your target zones in a non-emotional way.
That’s it. It couldn’t be any easier and the only cost is a sheet of paper and some of your time.
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Here is my personal game plan, which I use on a daily basis. You can download it here.
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So there you have it ... 5 EASY STEPS that can protect and grow your money in the future.
Every success in trading and in life,
Adam Hewison
President, INO.com
Co-founder of MarketClub
Yeah, this is most helpful, I like this game-plan, gonna try it as soon as possible..Thank you very much..
Gary Gensler
Steps 4 and 5 are confusing. Step 4: Do not make market decisions during trading hours.
But in step 5 you advise "adjust your money management stops and your target zones ". I can do this only during trading hours. I don't know what you mean exactly in step 4. Does it mean avoid selecting a particular instrument to trade during trading hours?
Venkat,
Thank you for your feedback.
Step 4 is basically to say not to make any emotional trading decisions in the heat of the battle. It is much better to see how markets close and then make a decision as opposed to seeing markets swinging up and down erratically during the day. If you have your game plan mapped out then you pretty much know what you want to do. As for adjusting stops and target zones it's best to do that away from the market after things have settled down in my opinion.
All the best,
Adam
My experience with penny and microcaps shows that often when a stock jumps up in the morning, it will begin to fall back mid-day.
If a trader can closely track it, he can take profits early and avoid losses.
Often, vice-versa also applies, but is not as reliable, IMHO.
Referring to penny and microcps, I've observed that many stocks which jump up in the morning are likely to fall back in the afternoon.
If a trader is able to closely track the stock, he can take his profit ahead of any downturn. Sometimes vise-versa also applies, but not as often..
Based on my review of the candle videos in the library,
I like to look at the market in the last half hour to see what the daily candle is doing.
For example, if I'm planning to go long or add to a position on a new 3-day high,
I could set a Buy Stop for the new 3-day high, but if it's a false breakout,
the market could tag that price and then go back down.
If the candle shows support, and a close above the new 3-day high with volume at or above the 20-ma volume,
I think the odds favor some more upside rather than a false breakout.
Cheers.
Good day!
This appears to be very good, quite similar to the paperwork I used to track my commodity trading in the Eighties, as learned from Dr Bruce Gould.
However, I feel Step 4 can lead to problems:
"STEP 4: Do not make market decisions during trading hours."
This is fine if one has an automated brokerage/program that will do this for you via stop-loss orders and limits, but those without such could suffer major losses on a bad day.
I've noted over the years that when a price moves 5% or more --up or down!-- there is a 70% probability that it will continue to move in that direction. This is why one MUST keep an eye on one's holdings. Of course, I'm semi-retired, so it's easier for me to do this, but automated programs should monitor this as well.
All best,
Joseph, 67
Victoria, BC
Yes all good steps.
And if you work duing the day:
STEP 4: Do not make market decisions during trading hours. Is very important.
You will be surprised how easy it is to enter an order INCORRECTLY when multitaskig at work.
One more thing - keep a journal. Once you get more experince you can revist old trades and see what you did wrong. You never stop learning.
I don't think step 5 is stated correctly. If you review and adjust your game on a daily basis, you really don't have a game plan at all. The game plan should be based on assumptions that are not adjustable so frequently. Daily adjustments are an invitation to emotions to get into the game.
pretty intresting ,
mainly about not taking decisions in trading hours .. I think it really gonna help, everybody ..