Hello there, I really wanted to write this post because I feel it is something that will help a lot of aspiring traders get that "click" that really makes you consistent.
I believe a lot of new traders have a very decent amount of knowledge, I mean it's all here. There are so many DVDs for you to get so knowledge itself isn't the problem.
I often read "trade reports" here on profitly and most of the times they sound way to random to me. A person would say they were watching the stock and then they bought the breakout and then it failed so later they decided to buy it on support and these all sound like great trades or at least most of the time but ARE THEY IN YOUR TRADING PLAN?
I think a vast majority of traders think about their trades in a far too random fashion and I think the biggest piece of advice often gets overlooked which is "Master one setup first and don't trade anything else."
Tradingsim.com is a great site where you can simulate live market data from the past several years and a great place to test out your setups and your trading plan. It isn't completely like the real deal but it helps get your feet wet.
Before you trade live make sure you got your trading plan written out and that you are completely confortable with it, it should almost become like a boring habit you do without thinking. Now of course I am paraphrasing a bit here but there really shouldn't be that much thought and stress in it, most of the major decisions should be laid out for you in advance.
I will share with you a shortened version of my trading plan just as an example of what I mean.
1. Scan for stocks that gapping up or down more than 3%, are not running into any SR levels i.e. have a "clean chart", have high relative volume and a float below 100m and ideally have some sort of news propelling the move.
Also look at % gainers that are breaking out or in a bull or bear daily pattern and could be in play during the next few days.
2. Entry method 1. quick opening range breakout on the 1 minute. As a stock makes the first high and the first low of the day measure the distance and calculate your position size, if you're entering at the top of the range as it's breaking make sure that if you are stopping out on the low of the range you aren't losing more than 2% of your account.
The best way to buy would be on the bottom of the range (with still the same position size calculated above) once you see a signal on the level 2 such as a held bid or a wall of buyers. That way your risk is incredibly small % wise.
Once a stock breaks look for it to give at least a 1to1 risk reward but if it starts descending back into the range be vary of stuff moves and consider exiting or lightening up your position. Once we get above a 1to1 take of half on the first red candle just to lock some in and take the rest of as it crosses below your 13 and 9 EMAs.
This can be applied completely inverse on stocks that are gapping down.
Entry method 2. ABCD pattern
If a stock washes out hard or makes a big move out of the open and then pulls back look for a it to start making higher lows and bulding a triangle formation that could lead to a move and eventually a red to green or a break of HOD. Same rules apply here, calculate the range and adjust your position size, take half on the first sign of weakness and let the rest ride with the EMAs.
This is just a simple small example but everyone should have something like this. A strategy that suits them and that they can do over and over again. That will get you confidence and consistency in the long run.
A lot of people have a great amount of knowledge but it is useless unless you structure it in a useful way. Make yourself a trading plan filled with your "recipes" your trading setups and then paper trade it or use the simulator for at least two months. And if your average gains are bigger then your average losses and you are positive at the end you are on a good path.
Thanks,love it
Thanks
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