Three Step Process for Trading Plans
It felt like the first day of the rest of my life. I had decided I was going to get serious about this “stock market thing” and dedicate myself to learning all I could. I knew this was going to be my ticket out of a series of dead-end jobs and take my family to places I knew I wanted to be.
I just needed to figure out a strategy that fit my personality and appetite for risk. I had to become serious about my future.
You see, before I was able to pull five-figure winning trades out of the market, I was right where you probably are now — uncertain how, but determined to get there.
(I now fly in style… far removed from the days I was a landscaper in Texas)
Over the last few years, I’ve met successful traders from across the globe. Heck, I’ve even mentored some that have gone on to become multi-millionaires themselves and countless more who are just crushing the market.
Do you know what their trading styles have in common?
If you guessed their strategy…you’re wrong. You see, there are plenty of ways to skin a cat. The traders at Raging Bull make money from– penny stocks, options, swing trading, biotechs, small caps, day trading… you name it.
There is no single “system” that creates wealth for traders.
There is no “black box” you can follow and instantly make money.
However, what they all have in common is…
THEY ALL HAVE A TRADING PLAN
If you don’t have a plan you are trading by the seat of your pants.
Not having a plan can cause you:
– To get emotional about trades
– Revenge trade
– Churn your account
– Hang on to losers for too long
– Take profits too early because you want to feel right
Of course, the fewer mistakes you make, the more money you keep in your trading account. That said, let’s go over the basics of what a trading plan should have. Click here to see my Three Step Process.
Step One: Thesis
You should be able to explain why you want to get long or short a stock. Reasons could stem from technicals or fundamentals.
I’ll help you along the way, but eventually, you too will gain experience and start to see winning patterns from the market. These patterns basically force you to get into trades because of their high probability of success.
Step Two: Outline Entries and Targets
Once you’ve identified what side of the trade you want to take ask yourself where do you think it can move.
For example, if you want to get long a stock, what price are you willing to buy it? Are you willing to pay up if you miss your price or will remain patient?
Often traders will get FOMO (fear of missing out) and chase trades resulting in a bad entry and poor execution.
However, I trade under my terms, and if I miss a trade so be it, the market will give me another opportunity down the road. I don’t trade for thrills, I trade to make money which gives me the freedom to live my best life.
Once you’ve identified where you want to buy, you’ll need targets. For example, I’m buying XYZ stock at $20, and I think it can go to $22 over the next day or two.
Of course, not every trade is going to go your way, that’s why you need two targets. The second target is your stop loss, the area that you’ll get out of the trade and cut your losses. I’ve been able to survive in this game by letting my winners run and keeping my losses relatively small.
Going back to the example, if I’m buying at $20 I might want to put my stop loss at $19.50 or $19.
You want to put on trades that have favorable risk vs. reward. In this case, if you risk $0.50 to make $2 that is pretty good.
Step Three: Risk
How much do you want to make and how much are you willing to lose?
If you want to risk $500 per trade than you have to position correctly.
Thesis: Long XYZ @ $20
Profit Target: $22
Stop Loss: $19.50
If you are risking $0.50 then you can buy 1000 shares. That said if the stock hits your target you can make upwards to $2,000.
Stick to your plan and let it play out. It’s helped me become a millionaire many times over again and I’m confident it will help you become a more consistent and profitable trader.
To your wealth,
He made millions in the market before the age of 30. Now he’s teaching others how to cash out with his new system.
Click to get your free training.
Small Accounts welcome.
MENSA considers him a genius.
Find out how this former landscaper makes millions trading the trickiest market.
As a gym teacher, he used to show kids how to get in shape.
Now, he’s teaching adults how to get stronger at trading stocks. Will you become his fourth million dollar student?
Trades and Tips
The best time to plant a tree is 20 years ago… When we see volatility spikes in the market like what we’re experiencing now, investors start to get nervous and start asking themselves if their portfolio is hedged enough to handle a downturn. You see, when the markets...read more
It’s been a wild ride for some traders this week with all this volatility. Just last week, someone in our Millionaire Roadmap presentation asked if we’re prepared for the bear market… Here’s one thing that people new trading have a hard time grasping when they get...read more
Back in the day, there was a claim that 90% of all options expire worthless. It sparked a debate on whether option sellers were more profitable than option buyers. In fact, option selling was pitched to investors as a way to collect passive income. It was that easy… ...read more