We as traders focus on key things in the market to help our strategies work. If you have traded or bought stocks personally before, then these three things can be applied to your trading. If you haven’t traded before, but are willing to put in the time, dilligence, and money to become a trader than you need to understand the importance of these key trading decisions to be a better, and more effecient trader.
# 1. What Stocks We Are Trading – Are you a swing trader, a day trader, whatever kind of trader you see yourself as, it is important that we pick the right stock/futures contract/ ETF, etc..to trade based on your strategy. So how do we know what we should be trading? Well depending on the type of trading you are doing, there are resources like Youtube, this blog, and chatrooms where you can find other like minded traders and figure out what stocks they are trading. If you are having trouble finding good stocks to trade, grab the tickers from the other traders you find that are successfully finding good stocks, and research those stock’s characteristics. Me personally as a day trader, rely on stock scanner’s to pull stocks from the market that fit into my strategy. I have day trading scanner tutorials on my YouTube channel. Here is the link.
# 2. Where We Enter a Position – Choosing the right entry is important. There are a ton of different ways to choose an entry. Do you buy the pullback to the EMA, are you placing a Stop Limit above the resistance to get filled on the break. Find an entry that makes sense to you, and practice entering at those spots. Know that even if you feel the entry was solid, trades don’t always go in our favor. We look for the best entries based off of experience. It is important that you practice your strategies on paper first before you enter the markets where other emotional factors exist that can sway you away from something that works.
# 3. Where We Exit Our Position – this could technically be a two part. If we exit at a loss, we call that risk management. If we exit for profit we call it ……well….profit. It is important to have a clear plan when we make a trade. In day trading the plan is put together very quickly and takes experience to get it right. We want to cut the trade if it does not perform as expected (and set an overall loss point % or net loss to exit on), and capture as much profit as we can before the trade becomes risky again.
The main focus of trading, IS NOT MONEY. I will say this again, the main focus of trading IS NOT MONEY. Our main focus as traders is working our strategies, and managing our risk. We all want to make money as traders but we have absolutely no control over that, we have control of us, meaning what we choose to trade, where we enter, and where we exit. Money is the byproduct of constantly revieiwing how we are trading based off of these three things. If you reflect on your trades routinely, and evolve so that you are executing these three things well, you will become a more efficient trader.
In conclusion, trading takes experience, and experience equals time. You should practice in a practice account until you feel like you have these three trading decisions dialed in, and effeciently executing them. It’s your money, take it seriously and be patient with yourself. It is difficult to expedite the process of becoming a profitable trader, but if you focus in these key areas you will fair better in the long run.