In The Trade | Stocks & Mutual Funds |
|
|
Plan Your Trades and Follow Your Plan - Stock and Forex Trading
Scuba divers have a plan to follow every time they dive and so should traders...A colleague of mine just returned from a scuba diving trip in Cozumel, which just happens to be one of my favorite places to dive. Anyway, she was telling me about an unexpected difficulty she encountered while swimming around the corral reef down about 85 feet. It wasn't anything serious, but her story reminded me of something my scuba instructor used to say over and over again. "Plan your dive, and dive your plan". There is a similar need in the worlds of stock trading and Forex, to follow the same dictum.When you're down about 90 or 100 feet the nitrogen acts on your body in a way that's not too dissimilar to having one dry martini too many on an empty stomach. It's called Nitrogen Narcosis, Rapture of the Depths, or Martini's Law. So the thing to do is get your planning done while you have a clear head, (i.e. on the surface). And then when you're deep into it, and you're feeling a bit euphoric, or nervous, you don't have to make any decisions about 'what' to do - you have already decided that before the emotional roller coaster starts. You just follow your plan. This holds true for trading as well. When you're feeling the euphoria or nervousness set in, remember to follow your plan. Which means, that you have to have created a plan to follow! Clear heads will prevail over the long term. Years ago, I had the good fortune of talking with a trading guru for several hours. This individual is world renowned for his trading saavy and skill. What he elaborated in that conversation had a tremendous impact on me. HE said that when he was learning how to trade, his family enforced only one rule, that he had to follow. KNOW WHERE YOU ARE GOING TO GET OUT BEFORE YOU GET IN. He felt that the problem that most traders have was that they felt that this simple rule did not apply to them. I remember sitting and speaking with him and thinking about my own mistakes... How I sometimes was letting hope take over in my decision making. I've learned to be prepared ahead of events, when I trade. It's made a world of difference. Many traders think that crying "UNCLE" on a trade and taking a loss is unacceptable. Since that conversation, I have taken numerous losses on trades. But it's funny, how they don't have the STING that they used to. Why? Because I PLAN MY DIVE and DIVED MY PLAN. When a trade moves towards the loss column, while disappointing, I have a plan to handle the situation. I know what to do, no matter where my emotions are at the moment. This is really simple and incredibly workable. Apply it to your own trading and investing. You will cut your losses sooner and be prepared to take advantage of opportunities quicker. You will be more aware and learn more from your mistakes... About the Author: Scott Harker is the publisher of several websites including: Sherlock Holmes Pastiches, Harvest The Sun | Renewable Energy, Coin Collector's Dream, Dieting Help | Move More - Eat Less, and On The Hook | Fishing Supplies.
News about Planning Trades
Google News |
RELATED ARTICLES Cash How many people went to a cash position this week? There is no question that this market has scared the bajebers out of many investors, me included. Fortunately, I started going to cash some time ago, but I did give back a substantial amount of my profit. Choosing An Investment Stock Broker If you want one.And I don't recommend any broker with whom to trade who will be giving you advice on what to buy and sell. Online Investing & Stock & Share Trading: 4 Reasons Why Most Online Investors & Traders Go Broke Are you attracted to the idea of being in control of your financial future, but confused about how to start investing in the stock or share market, while avoiding costly mistakes?Or maybe you're disappointed with your performance so far?Does it sometimes feel like every time you take the plunge and buy into the market, the price goes down?That's understandable.. Emotional Involvement I'll bet with almost anyone that has stocks or mutual funds in his portfolio that he has losers, but he won't sell them because he "likes them" or some similar excuse. This is the philosophy of a loser. Your Job There are so many kinds of work that needs to be done and you are doing one of those jobs right now - unless you are one of those two and a half million that have been laid off during the past 3 years. The press continues to blame China and India for stealing away all these forms of employment, but they don't have it right. Why Buy and Hold? Since I can remember, and that's a long time ago, the Wall Street brokerage companies, mavens and mutual fund managers have been exhorting the mantra of Buy and Hold for all your investments. There have been erudite studies published that this is the only way to go. Inverted Interest Rates Inverted interest rates? What's that? Who cares? Even if you don't understand what Mr. Greenspan is saying (and almost nobody does) it is important to you because it could mean you might lose you job next year or have to cut back on some of the things you want to acquire. How to Short Stocks? How to Make Money when Your Stocks Go Down by Shorting The stock market can present you with a lot of hot stocks every day. Many of them are new technology stocks that come from the nanotech, biotech, voip, healthcare, homeland defense or internet sectors. What Are You Waiting For? Do you own any mutual funds? In an IRA or 401K or wherever. Privately or at work. Price to Earnings Ratio - P/E After finding the price of a particular stock, usually the next number everyone looks at is the P/E ratio.P/E is the ratio of a company's share price to its per-share earnings. Expense Ratios Mutual funds and brokers are always preaching not to buy any fund with a high expense ratio. That is the annual costs of the fund to pay for trading of stocks within their portfolio, salaries, rent, telephone, analysts, etc. China Syndrome There has been great condemnation recently because China has been selling its goods on the world market at prices below what other countries, especially the U.S. Losses, not Profits, will Stop You from Trading in the Market Should the market turn against you, it is important that you design a system that will produce as much loss as you are prepared to take. This loss, known as drawdown, is the maximum amount by which your trading float will temporarily drop at anytime. The Problem With Hedge Funds Are hedge funds a suitable investment for you? Hedge funds are an appropriate investment for qualified purchasers with a net worth above one million dollars and an annual income exceeding two hundred and fifty thousand dollars. Purchasers are often required to sign an acknowledgement confirming their qualifications to invest in hedge funds. Investing in Stocks and The Game of Monopoly To begin, you might look at playing the stock market as though you were playing a game of Monopoly. That's right; for playing the stock market 'game' is not unlike playing a game of Monopoly. Is the Stock Market for You? Many people would like to diversify their portfolios to expand their holdings. Making it big in the stock market has been a dream for many people who want to strike it rich. Market Experience of a Naïve Stock Operator Sometime in the third quarter of 1997, someone told me that I should play the stock market. Knowing nothing about the stock market, I turned to some colleagues to seem to know a lot about it. Stock Trading Secrets? How often have you come across an advertisement or e-mail proclaiming to "teach" you the stock trading secrets that Wall Street Insiders don't want you to know? Usually included in the descriptions of these trading products are claims such as "Make 10K monthly in minutes per day", or "Learn the secrets of Professional Stock Brokers", etc. etc. Investing in Dividend Paying Stocks I was recently interviewed for a press release through a financial question and answer format. One of the questions asked of me in the interview was:Where do you think the stock market is headed over the next five years?My Answer!Charles M. Investing Basics - Stocks, Mutual Funds, Real Estate & Online Investing Have you ever thought of investing? Do you have a family that you would like take care of? Does the idea of making money with stocks, bonds, mutual funds and real estate interest you?Investing is essential to making money. Whether it be stock investing, investing online, real estate investing, finance investing, investing in bonds, investing in mutual funds. |
| home | site map | Privacy Policy |
| © 2008 www.in-the-trade.com |