Stand By Your Plan - Real Time Stock Trades

Provided By Ultimate Trading Systems

Using Target Prices For Your Real Time Stock Trades

A real time stock trades plan is only useful if you follow it. Following your plan will make you successful, yet many involved in real time stock trades circumvent the trading plans that they have carefully created. They become emotional invested in their real time stock trades, to the point where they ignore all warning signs. Remember, when the market corrects itself, which it always does, no position is immune, no matter how strongly your ego may be tied to it.

Many investors in real time stock trades will watch as their portfolio values are cut in half or more, yet they will still hold their positions. They may fear being left out of a big gain, or be so deep in loss that they felt they couldn't possibly sell their real time stock trades at that point. But even if you believe that all positions will recover from their losses, and the truth is that not all of them will, this is a terrible way to trade.

You tie up too much capital in your real time stock trades, and your rate of return plummets. Just as you shouldn't become emotionally involved in real time stock trades, you should also never become tied to ideas. By this I mean becoming so fond of a particular strategy or trend that you cling to it even after it has stopped working. You need to have strategies for your real time stock trades, and to have plans, but you must also be aware of the shifts and swings of the market, the beginning and the ends of trends.

When you first form your plan for real time stock trades, you should consider what price or price range you think the stock is likely to reach. This is often called a target price, which gives some traders the wrong impression. A target price is not a price that the real time stock trades have to meet. Real time stock trades do not have to do anything. If you treat your target price as a goal, it can lead to many problems. Your target price should only be used as a guideline.

The target price helps you figure out your risk-to-reward ratio, and it gives you an exit point in your real time stock trades. At the least, it should give you a point where you'll reassess the real time stock trades ability to continue to move upward. But your real time stock trades may never reach your target price. Many market factors can interfere with its progress, and you may have set your target higher than you should have. Since there's no way all your real time stock trades will hit your price targets, it is a good idea to sell half your position at a more conservative target. Routinely taking profits will reward you in the long run.

There are a number of things that can interfere with a real time stock trades movement and force you to close your position sooner than you'd anticipated. Your real time stock trades plan should cover all of these possibilities, but here are some reasons that should always prompt you to close a position:

• The end of a trend. All trends end some time, and you should be prepared for this.
• The real time stock trades upward movement has slowed or been abruptly broken, ending its momentum.
• The stock is approaching a major psychological barrier, perhaps reaching $100 or $200 a share, which should have been anticipated in your plan
• The real time stock trades are about to reach a resistance level it has been unable to break through before. This technical barrier should also have been anticipated in your plan.
• A sudden market-wide decline, or the threat of one, or some other serious uncertainty, which leads to unsafe market conditions.

Exiting a losing trade is not a big deal. Ending a position whether or not the real time stock trades reaches their target price, in accordance with your trading plan, is good trading. The best traders would rather lose a small profit than take an unnecessary risk. You don't have to win on all real time stock trades; no one does, and it's dangerous to try. In fact, by limiting losses, a good trader can be profitable overall, and make money on only 40% of his real time stock trades. Cut your losses and start fresh with something else when you need to. You'll be happier, and you'll make much more money.

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