Read rjm77me's blog in RSS
July 18, 2009
Share This
It is not lack of knowledge or skill. Then what is it?
One of the biggest failures in my humble opinion is absence of a written trading plan. All of us have it in our brain locked up and know what it means.
Then why does trade not work at the right moment. Will you be a passenger in a plane from New York to LA where pilot does not have a confirmed flight plan / route plan before he takes off? What should the pilot do when he hits a real head wind or extreem bad weather?
Most of the failures are due to lack of written plans. A great trader normally should write down profit and loss target at the time of entering a trade. Can we make some changes to the plan when profits are pouring in - sure? You can change your stop loss or take partial profit or even buy more. Example a trader bought some PCU Southern copper last week at 20 .59 and profit target was 21.49 and it hit the mark on Wednesday. The market was in up swing - PCU chart said do not sell. So what did trader do doubled his position and moved stop loss to 20.99. He put a sell order at 22.79 for 50% of his position. New added position did sell for a neat two day gain of 5%. Should he hold rest of position or add more here. He did move his new stop loss to 22.39 for balance of his position.
What is your opinion?
Should the trader stayed with his original course and sell per original plan? Was it OK to make changes to the original plan and write new targets in journal.
Was selling 50% position and taking profit at 22.79 a good decision or should he have added more at that point? Please look at the chart for PCU and post your guidance in this trade.
More important do you think a trade journal is a must and part of making profits.
Best wishes and as my mentor says TRADE WELL
