Markets futures are down slightly this morning after 2 days of Powell’s testimony in front of Congress.
I exited the paper trade position in BRKB and APD earlier this week with gains due to market conditions and some uncertainty in the oscillators. Both of these stocks closed yesterday below our cost basis and exit prices. In this instance, I used the knowledge that Powell was speaking and the negatively crossing Stochastic to help me decide to get out of the paper trade. In either case, a majority of the guidelines were still intact which could keep more risk tolerant traders in the position. Being more risk adverse, I chose to exit with gains.
With the guideline that I have provided, my goal is to provide you with some tools to help you make trading decisions with a higher probability of success. Does every trade work out? No, but that is why we use stop losses to exit trades that go against us with minimal losses while letting good trades run with trailing stops.
My goal is not to tell you when to get into or out of a trade because everyone has a different investment timeline and risk tolerance. With the guidelines, whether they are mine or something you come up with, we have a set of rules to follow that give us some indication of price action momentum and trends.
A trading plan helps to promote discipline and consistency in trading. By following a set of guidelines and rules, traders can develop a routine and stick to it, which can improve their overall performance over time. What a trading plan doesn’t do is tell you the exact price to enter or exit a trade. This decision is up to the individual.
I talk a lot about patience, and it is the hardest part of swing trading. We are geared to always be in the game. Noone likes to be on the sideline but sometimes it is a crucial part of swing trading success. This information is for educational purposes and is not a recommendation to buy or sell a security.
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