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Sticking to the Plan – Stock Trading Basic Lessons
You have purchased stock at the price you wanted and it has suddenly shot up by $1. Do you sell it for a quick profit? If you do, will it continue to rise? You hope so, but suddenly it begins to fall, and fall, and fall. It has fallen to less than your purchase price and you want to kick yourself for not selling while a profit was available. You may now be faced with a loss.
After punishing yourself and others around you by being in a bad mood, your stock begins to rise. You tell yourself that if it reaches your original purchase price, you will sell it and get out. Thankful for not losing in the trade.
Your stock does rise to your original purchase price and you sell your stock, again thankful for not losing money in the trade. Unfortunately, the stock continues to rise and exceeds your original purchase price by $2. You are again kicking yourself for not sticking with the trade and profiting from it.
In the back of your mind you wonder if you would have actually sold the stock for a profit if you still owned it. Or…would you have again been a victim of your own inaction.
You come to the realization that you need a plan. Not only do you need a plan, but also you need a plan that you can be confident in. A plan that you know will be profitable more times than not. A plan that if you stick with it would sometimes result in a loss, but you know that the next trade has a very good chance of being profitable.
Some develop plans on their own, based on trading that they feel comfortable with. Others are continually looking for the “Holy Grail” of trading plans (which by the way does not exist). If you are looking for the Holy Grail of trading, the plan that will always result in profit, you will be disappointed for a very long time (i.e. a lifetime).
Some investors continually educate themselves by reading, listening, paper trading and experimenting with different techniques. It can be a lifetime love and can be very profitable at the same time.
For those looking for a plan, be sure you find one that covers:
- money management
- risk management
- optimum entry points
- exit strategies
If you invest in the stock market and don’t have a plan, you may as well be playing Russian roulette. Before you harm yourself and your family financially, find a plan.
Visit http://www.10000elephants.com to learn more about trading strategies and to purchase our 10000 Elephants Trading Strategy.
Over 90% of our trades using 10000 Elephants are profitable.
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