You've often heard the saying; "plan your trade and trade your plan," but what does it really mean? I don't suppose the army of day traders that have gone on to fight other battles that are not as deadly on their portfolio, had planned to lose money? But did they plan at all? And if they did, was it as the commander over a force they had no control?
The first group are the shoot from the hip type, they wade right in and take a shot at anything that seems to be moving. The stock starts down, "one more tick and I'm out.....darn out -.25.......oh sh*t did you see that! The second I got out it popped 3/8! I'll get the next one.....I'm in.....I'm up an 1/8! I'm out! After all they say you can't go broke taking a profit!....This is fun now.....next.....this one is a wild one bid/ask all over on second I'm up 3/8 then I'm down 3/8....ah good it's settling down now, I'm a little in the red it'll come back shortly...just like the one I got out with a loss on, the one that popped after I sold....umm doesn't looks so good now, in just a sec it will recover and I'll exit even......oh no looks like sellers, I'd better exit.....oh pleassssse take my limit order, pleassse.....gezzz now the ask is below my order, time for a market order....its gone I'm out!....big loss but at least I'm out and can try again tomorrow."
Surely that isn't the plan, win a little lose a lot? An no one "planned" to fail, just failed to plan.
The second group are a bit more studious, and often have a history of success at other endeavors, they studied every book, read every magazine, joined every newsletter and even paid the big bucks to be tutored by the famous Joe Stocks. "Oh, what a loser, so unorganized he couldn't pick a winning stock if it hung from his nose...I'll have no trouble trading stocks, after all I have (commanded armies, performed brain surgery, joined the Supreme Court), if I can do that I can make this stock trading work! Okay, I'm ready, here we go...the stocks dohicher just crossed the leading flabbenhouser line.....and it was confirmed by the expansion of the myopticalzorcall. All the planets are a line! It's time to buy!.........What? It's going down, it can't be going down.....go up, I tell you go up, you have to go up, there is no way, no way, it can't be going down, no way.....I can't believe it, its going down, this can't be, it can't be happening to me, no, it can't go down, I did everything right, e-v-e-r-y-t-h-i-n-g."
This group had good planning when to buy, but failed to plan for selling, or even failing. Don't let the emotional "I never fail" get in the way of your success.
The above is from my commentary this week, I'll write more about planning your trade later. It is important to know where you are going.
Sam
