Planning For Profit - Entering, Holding & Exiting On Line Stock Trades

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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 on line 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 don’t 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 you’ve 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 having your on line stock trades “all come together”.
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