shaun Rosenberg

Having a precise trading plan

Having a trading plan is very important to anyone who is looking to make money in the stock market.  You simply cannot succeed unless you have one.

                Having a trading plan is very important to anyone who is looking to make money in the stock market.  You simply cannot succeed unless you have one.

                Too many people go buy a stock with no plan oh how they will exit, or what they will do in different situations.  They believe in the false hope that if you buy a stock it is going to go up and that will make you money.

                Sometimes that happens but it can also go down and you lose money.  You must be prepared if you want to be successful.

There are 3 questions that all traders should answer before they get into a position.

1.       Why am I getting in?  Are you getting in because you truly believe that the company is a good buy and the stock is going to go up, or are you getting in because you heard some guy with a suit who was on the 6 o’clock news say he likes the stock.  You don’t know who he is or what his plan is for the stock.

2.       What will I do if the stock goes my way?  If the stock does go up what do you do?  Do you have a target where you would get out at, or are you going to follow the stock up with stop orders.  There are too many traders who buy a stock watch it go from $40 to $70 and watch it fall back down to $20.  Knowing when to get out is critical to a stock market trader.

3.       What will I do if the stock goes against me?  Obviously no ever expects a trade to go against them.  But it does happen.  Perhaps the most important part of trading is cutting your losses short and letting your winners ride.   You might want to have a stop level that you get out at.  This would be the most you are willing to risk on 1 trade.

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