https://profit.ly/content/premium/13450

 

Great information by Michael Goode about how trade plans can help you manage emotions while you are in a trade -  34:00" into the webinar.

Useful when you are in the habit of getting out when stock goes even just 1 tick against you or you take profits too quickly.

 

- Emotions are always going to be part of trading.

- The more times you take a trade, the easier it will get but it will never be easy because emotions will always be part of it; you will get better at managing your emotions.

- Practice over and over again on good setups, but do not trade with large size until you are consistently profitable.

- Have a CHECKLISt and check off the boxes before you get into a trade (criteria)

- Have a WRITTEN TRADE PLAN before you get in a trade

- Have a trade plan based on PRICE and PRICE ACTION

 

Example

$GIGA short - not great r/r after 2 big down days.
Short on failure to go r/g or on lower highers/double top. After entry, cover 1/2 after it drops 10¢, cover the rest on double bottom or higher lows. Also cover if consolidates below my stop loss. Cover if it breaks to a NHOD.

 

Instead of just

entry 2.08 - risk 5% - goal 10% - position 100 shares (with risk/goal not being based on support and resistance levels on the chart)

 

When you incorporate price, price action and thesis in your trade plan:

- reminds you of BIGGER PICTURE so you do not get scared out of the trade when goes 1 tick against you

- gives you a SCRIPT FOR EVERY SCENARIO so you don't get caught like a deer in the headlights when trade goes against you but also allows you to let winner run as long as criteria in your trade plan still stand

 

Make sure your risk/reward are based on REAL SUPPORT and RESISTANCE levels on the chart, not on some random number you "feel comfortable with" but that has no relevance on the actual chart.

 

Make sure that you are comfortable with your POSITION SIZE and the POTENTIAL $$ LOSS if the price action goes against you.

"If I  buy 100 shares at 2.08,  I am comfortable with taking a $10 loss if the stock breaks below the support level that is my risk".

If you are not comfortable with that number, reduce your position size.

Trade small enough so that you trade scared but are not too scared to take the trade when the setup is there and you have a solid trade plan before you enter the trade.

 

Look at the chart on different time frames. Use 1M for your entries but look at 5M/10M chart to see if trend is intact and there is no reason to get out of trade, based on the criteria in your trade plan. Looking at 5M chart cuts out the noise that 1M candles on a very volatile stock can cause.
When price action starts speeding up, maybe change to 1M chart.