Shopping plan for fear and greed

Shopping plan for fear and greed

It will get you every time. If you fail to plan, plan for failure, especially when it comes to trading.

The stock market is an expensive place to learn how you react under pressure. When there is money on the line, people's ability to make sound, rational decisions often becomes clouded in the heat of the moment.

Ask yourself what do you do if you recently purchased shares in the company, and soon after the Securities and Exchange Commission announced an investigation into companies 10k form?

Or what if a terrorist group successfully marks bomb on an airplane, you will sell your airline stocks or buy more?

What would you do if a company that produces organic beverages announced recently discovered that their main product line was marked with the E-coli?

These are the type of questions that all successful traders have the answer - even the scenarios like these to happen.

What kind of trader are you? Do you buy or sell short the guests and do not use protective stops to exit the position that we should go against you? Or have a well defined plan that includes a "worst case" scenario, profits are part of a well-defined exit points and exit paths stops to maximize profits?

I am going to suggest that if you are in that group who think that changing your trading habits - or give up trading all together. Let's face it, you are offering potential trade in commercial trading arena with no solid plan. I'm not saying that a well prepared trader is also a candidate to fully lose everything. I say ready trader has a better chance to capitalize profits and keeping it "cowboy trade."

To define a trading plan, one designed to keep you in the game ready to pick the winners and minimize losers.

1) I know at what price you exit, even before entering the position if the position goes against you. You know how much money you are willing to lose, if that amount is the percentage of your portfolio or a fixed dollar amount helps to keep your precious trading capital in tact and ready to win.

2) using stop orders to protect against catastrophic losses. Have a good up-cancel order running at all times to protect themselves from trades go beyond your loss threshold. Realize that just because you have the ultimate goal in a certain price does not mean that you will get that price if your stock moves against you. Bad - or good - news has a way of moving the stock price fairly quickly. My priority is to use a direct order and stop order to halt border. Understand what types of orders your broker provides and how to use them.

3) Output position after a certain time, if your position is not a positive move even if your stop price is hit. Think about it, if you enter the stock based on the idea that it will move in your favor and do not - meaning that you say? You may be right for the direction of price action. To consider the opportunity to get out before something happens useless. You grow up and get over the idea that we should be right to make money trading stocks.

4) Take at least some profit from his position if the stock moves in your favor. Do not be greedy.

5) Once you have made a profit, working to maintain an open position as long as possible. This assumes the stock did not regain a good portion of the profits. Look for significant highs and lows out of place to stop.

6) Remove trading profits from your account. Have a plan to invest the profits elsewhere - in the long-term investment fund, or property, or pay off your debts.

Traders discipline in terms of their traders are likely to maintain and increase their trading accounts. Be one of those merchants.