Quick Tips For Creating A Trading Plan

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Tips On Stock Trading

Here you will get some tips on stock trading. So what are the biggest tips to actually creating a trading plan? So number one to focus on is look for charts that are what we call clean You want to find strong stocks, stocks that are breaking out, that are on everybody’s scanners. Those are the ones that are most likely to get more buyers. Number one, clean charts, breakouts, 52-week highs, five-year highs, one-year highs, all-time highs. Next, look for a catalyst. We often trade, a lot of us especially day traders, will trade stocks that are just moving for no reason.

Trading Tips

It happens. It’s not really a consistent strategy if you’re new because you got to be so quick with your entries and exits and so disciplined with your entries and exits. If you’re new, looking to develop a strategy, look for stocks with a catalyst. You want to find strong stocks, stocks that are breaking out, that are on everybody’s scanners. Those are the ones that are most likely to get more buyers. Number one, clean charts, breakouts, 52-week highs, five-year highs, one-year highs, all-time highs. Next, look for a catalyst.

We often trade, a lot of us especially day traders, will trade stocks that are just moving for no reason. It happens. It’s not really a consistent strategy if you’re new because you got to be so quick with your entries and exits and so disciplined with your entries and exits. If you’re new, looking to develop a strategy, look for stocks with a catalyst. it could be many things, it could be a contract win, it could be earnings announcements, we love earnings winners at 52-week highs, could be a partnership with another stock, and then another one that we like is what’s called hot sectors. You get a cannabis stock that has a new product, particularly like a CBD drink, these stocks have been ripping over and over again.

So we got a clean chart, we got a catalyst, the next thing we’re looking for is stocks that have ran in the past. History doesn’t repeat but it rhymes. And how does that apply to stock trading? Stocks that have ran in the past tend to run again. So bring up your Stocks To Trade or whatever charting platform you’re on, look at the past. Has this stock made big moves in the past? If it hasn’t, it’s less likely to repeat. It can’t repeat a move it’s never made in the past. You’re reducing your chance that this stock is going to break out.

So now you’ve got three or four criteria what makes it a good stock, how do you execute a trading plan? Next you’re going to look at that daily chart, that one-year one-day chart we talk about all the time, and you’re going to look for key support and resistance levels on that chart. Stocks tend to spike, consolidate, and either fail or re-break out. So as you’re looking at that stock that has these criteria we talked about, you want to buy as that stock breaks to new levels, and then you stop, you take your stop loss, ’cause remember not all trades are going to be winners, you’re going to be a loser.

Vital Strategy for Trading

Some of the best baseball players out there get a hit three out of 10 times. Trading, very similar. You have to manage your losses, take smart losses, so that you can stay in the game. So look to base your risk off those previous support and resistance levels, because you don’t have a trade plan if you don’t have a stop. If you don’t go into that trade with a stop loss in mind, you’re just gambling, you’re hoping, and hope, just like there’s no crying in baseball, there’s no hope in stock trading.

If you’re hoping for anything, you’re doomed. So now you’ve got your stop determined, you’ve got your entry determined, and then your goal, especially in day trading and swing trading, you’re looking for that three-to-one risk to reward on the chart. What’s that mean? If you’re risking 20 cents on your chart, you’re looking to take a reasonable goal of, say, a 60-cent gain. You risk 20 cents to potentially make 60 cents.

If you’re risking a dollar on this chart, say, it’s a $10 dollar stock, and you’re risking $9 level, you’re looking to make that $3 profit goal. So now you’re buying at 10, you’re risking nine, and your goal is 13. In momentum stocks we don’t overstay, we don’t get greedy. There’s all those analogies about getting greedy, hogs make money. Have realistic expectation, base it off the chart, build the case, and that’s the best way to build a trading plan and get that much closer to being a consistently profitable trader.

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