Do Your Homework
Having a trading routine is essential. It doesn’t even have to include a lot of steps, just as long as you have a routine in place which allows you to gauge market strength or weakness and formulate some trading ideas to capitalize on your market view.
Doing your homework for the trading day doesn’t make you a nerd, but wearing this watch would.Doing my homework includes screening for chart patterns, staying aware of scheduled news events (Fed meetings, earnings, economic releases, etc.), and monitoring my trading performance in case my trading strategy needs an adjustment. Staying on top of these things gives me a game plan for my trading each day. I get a feel for the market by seeing how many stocks or sectors are strong, weak, or just flat. It lets me feel prepared, knowing that I’m starting the day with more confidence than had I just walked into my office and started buying and selling stocks randomly.
While I cannot predict what the market will do, I can certainly outline a plan of trading actions to implement once the conditions are right. Being wrong is one thing, but indecision is unacceptable in this job. Trying to locate trades only after the market is already on the move is often futile. Even when I do find stocks to trade on quick notice, many times I feel as if I’m chasing them, which means inferior risk/reward setups and increased slippage. No good!
So find what works best for you and make a habit of doing your homework. You’ll trade more decisively and reap the benefits of daily preparation!
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Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com
[…] Obeying stops is one habit we can all be reminded to check. It’s easy to “just give it a little more room” and soon after realize that you’re in a spot where you feel it’s too late to exit (which is never true). Doing your homework is always a great habit to be in. Showing up with your game face is another one. Remember how small mistakes = small consequences? Habits like those can keep you on the right track as a trader and pay off nicely as time goes by. Making a habit just to show up prepared every day for whatever the market throws at you can have a tremendous impact on your progress and consistency as a trader….not to mention your P&L! Baby Steps worked for Bob Wiley! Little habits and constant progress end up making a big difference. […]
[…] So, be your own ally. Have a trading plan in place before you login to your account. Do your homework. Set hard stops as soon as your orders are filled, and let those safety nets keep your losses small (we all know how easy it is to blow a mental stop). […]
[…] If you’re clinging to some pet stocks, take a good long look at what you’re doing. If you’re right, your P&L will show it. But if that seems to be the one missing ingredient in your master plan, then it’s time to let that pet stock go and look for another good trading opportunity elsewhere. If your old favorite pops back up on your radar and you’re doing your homework, you’ll be sure to see it. There’s just no reason to cling to it until then. […]
[…] I’ve written before about my homework and the process I go through nightly to locate trading setups, but there’s a hidden benefit to my process that I feel greatly adds to my trading results. […]
[…] My lower threshold for volume is typically around 200k/day, and I rarely trade stocks below $10.00. I will occasionally make exceptions for each of these if I see a standout chart, but it’s rare. In the past couple of months, I’ve seen an increase in the number of stocks which meet these criteria. That’s a good thing because I’m a picky trader, and having more stocks at the price and volume levels I require is certainly advantageous. Although a larger universe of tradable stocks does translate into more homework, it also means I can continue to focus on the best chart patterns available and trade the cream of the crop. […]
[…] The home stretch is here. The 4th quarter is all we have left for 2006, so get ready to make it count! Where are you with your trading goals? Has it been a great year and you want to mostly hang onto gains? If so, stay picky and you’ll be fine. Have you had a mediocre year and you’d love to make some progress before the fat lady sings? If so, sit tight - there should be plenty of chances to make some good trades if you do your homework and look for them. Enjoy the weekend but take a moment to remind yourself of what you want to have achieved by New Year’s Eve […]
[…] Irresponsible trading is in many ways a byproduct of choices we make outside of market hours. One very common way to trade irresponsibly is by failing to do your homework. However, even worse is when you are not keeping close enough tabs on your trading account. […]
[…] I’ve noted before that I review many charts every night in my preparation for the following trading day, and I will probably always do so. I think there are numerous benefits to it, including keeping a streamlined watch list of trading ideas at your disposal, which greatly aid in my trading. […]
[…] Waiting on the market means that you don’t go hunting excessively to find a good trade. It means you do your homework and take what the market gives. I’ve found that when I have to dig and dig to find a trade that it’s usually not worth taking. The best trading periods offer up plenty of opportunities for entries and new trading ideas, so when you’re not seeing what you like don’t force it. […]
[…] What about your discipline? Are you slow to cut losing trades, hanging around in lame stocks when you know you should be bailing out and moving on to the next opportunity? Discipline applies to winning trades too - make sure you’re allowing your original game plan to play out and don’t cut the legs out from under those trades which are working in your favor. And are you exhibiting the discipline each day to do your homework and get prepared for the trading day? If not, create some new habits for yourself come January 2nd that will improve your odds of success. […]