Making a focused watch list and game plan for the trading day will increase the probability of you making money. We showed you guys yesterday how to make a comprehensive trading plan for stocks on your watch list. But at the end of the day, if you don’t stick to your plan and execute correctly, you will rarely capitalize on the opportunities during the trading day. Trading performance is the difference between a winning and losing trader.
Strategy and planning only gets you so far. It all comes down to trading execution at the end of the day. Today we will talk about how you can improve your trading execution and performance so you can actually monetize opportunities during the trading day:
Stick to Your Plan
Even when traders take all this time to plan correctly for the trading day, the execution of their plan is poor because they deviate from it. The get scared out by price action and get out before the stock hits their stop loss. They take profits early because they think the winner will turn into a loser. They chase because they don’t want to miss the move.
You should have your trading plan written or printed out in front of you so you can see while you’re in the trade. This will help give you the conviction to STICK to it and remind yourself why you’re in it in the first place. You cannot let fear and emotions dictate your decision making once you put money on the line.
Combat Fear and Emotions
Fear is the primary reason for poor trade execution. Fear of losing money, fear of a winner turning into a loser, fear of being wrong, and fear of missing out are the 4 ways fear will manifest itself in your trading. All 4 of these will cause you to deviate from your trading plan and your watch list, and make mistakes. We talked about how to combat these trading fears in detail in a recent article, but just to recap:
In my experience with our students, reducing position sizes is the most effective way to reduce trading fear. We trade scared when we are risking money we are emotionally attached to. Risking less money will actually end up making you MORE money because of your improved trade execution and performance. You become less scared when the stock dips against your position. You become less greedy when a move goes in your favor and more patient with your winners. You look at the market more objectively, which makes it easier to make rational decisions.
Add New Opportunities to Your List
Inevitably, new stocks that were not on your watch list in pre-market will come across your attention during the trading day. You have to learn how to make a trading plan on the fly during a trading day as well. These plays can turn a slow day into a green one. But you need a defined process for handling and capitalizing on new opportunities that pop up during the trading day.
Some traders when they see a penny stock up 100% immediately launch themselves in it without hesitation. They buy high of day and get smoked out because they were more worried about missing out instead of making a trading plan and researching the stock.
The temptation to hastily jump in new trading opportunities is greatest after you have just had a loss. You have to develop an effective routine for building and executing a trading plan DURING the trading day as well. Before you jump in you should look at the stock’s daily and intraday charts to see if there’s a low risk, high probability setup. You also should know the stock’s catalyst, and check its float at the very least before putting on a position.
Free Live Workshop
In tonight's webinar, we will go into more detail on how you can improve your trading performance and the execution of your trading plan from your watch list. You will get see exactly the process I use to make my trading watch list every day, and get actionable advice about how to build a successful watch list yourself.