Planning For Profit - Entering, Holding & Exiting On Line Stock Trades
By Ultimate Trading
A Sure Fire Routine To Increase The Profitability Of Your On Line Stock Trades
To quote that semi-famous line from the eighties television show,
The A-Team I love it when a plan comes together. In
stock trades, I always have a plan, and so do all successful
traders. Why is this so important? First of all, having a plan means
you've thought about why you're making the on line stock trades in
the first place. You have a compelling reason for the on line stock
trades and you see that it has a good risk-to reward ratio.
Without a reason for the on line stock trades and a sense of what
the reward should be, there's no way you can form a rational plan.
Second, having a plan eliminates the uncertainty that everyone has
when a trade you make starts to move in the wrong direction. That
uncertainty can be the source of significant losses. If you have a
plan, you know exactly what to do and when you need to do it. You'll
have thought out the possible outcomes ahead of time. There's
nothing to panic about.
Third, besides minimizing the risk of panic, having a plan also
minimizes other kinds of risk and maximizes reward of your on line
stock trades because, by following the plan, you force yourself to
act only in advantageous ways. You'll minimize risk and maximize
reward by choosing a profitable entry point for your on line stock
trades (and avoiding money-losing entries), holding your position
safely (keeping stops set where you've planned to set them), and
exiting profitably at an appropriate time.
In the market, all on line stock trades you make is a trade either
toward losing or toward winning. And within all on line stock
trades, each step - entering, holding, and exiting - also moves you
toward either winning or losing. That's why each step requires
planning, attention, and discipline. I will touch on the importance
of each stage of the on line stock trades in this article, and cover
them all in more detail in following articles.
It helps to understand that you can't know for sure where the best
entry and exit point are for on line stock trades, and that it
doesn't matter. Successful on line stock trades dont require
knowing things for certain. Instead, on line stock trades require
you to be able to gauge probabilities. If you always do the things
that have the highest probability of working, they should work out
many more times than not.
Finding a low-risk entry point for on line stock trades is every bit
as important as finding good on line stock trades. How can this be?
You can pick the best trade in the world, but if you enter it at the
wrong place, you may make no profit on it at all, and you may
actually lose money.
Nobody knows, for instance, which on line stock trades are going to
make them rich in five or ten years. Many companies won't even be
around in five or ten years. Doesn't it make sense for anyone,
trader or investor, to enter a stock at a point where it has a
better chance of making them money instead of losing them so much
that they have to wait five years to get their initial investment
back? Finding a safe entry point ensures you have the best chances
of making a profit in your on line stock trades.
The next part of your on line stock trades strategy involves keeping
your position out of trouble while you hold it until you are ready
to take profits. The most important part of this step involves
setting stops. You must set stops on all on line stock trades. I
cannot stress the importance of stops enough, and have several
articles on the topic that you may want to read to get a better
understanding of how necessary stops are.
Now that you've started to make profits on your on line stock
trades, your plan should tell you when it's time to exit. Knowing
when to exit is as important as knowing when to enter. Traders who
hold their on line stock trades too long often find that their
profits have disappeared. They ended up making no money, or even
incurred a loss, on what should have been a profitable trade. With
planning, this will never happen to you. Once youve created a plan
that details how you will find entry and exit points, and how you
will maintain your position safely, you will be well on your way to
stock trades all come together.
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