You have probably heard the saying "If you fail to plan, you plan to fail." This couldn't be truer within the world of investing. None of us start to trade with the intention of failing, but that's just what we are doing if we blindly look for trades to put our money into without a proper plan of attack.
The first step would be to find a time that you'll be able to devote to planning every day. It doesn't need to be a huge amount of time, but I would advise you to start with a 30 minute to an hour block of time.
I know we all get busy and it's effortless to skip a planning session here and there. But if you are serious about making money with the market, this is a step that cannot be skipped. Block out some time to plan, and don't let the minor distractions in your life get in the way.
I start every planning session by reviewing the industry calendars. This is effortlessly completed in the Dedicated Trader by going to the calendaring section. I look at the economic events coming up for the next day and the rest of the week.
If there are any significant economic events that may well affect the markets, I need to know so I can prepare by tightening my stops. And you can find some events, such as the FOMC minutes, that can create fantastic trading opportunities.
I also check the earnings calendar to determine which organizations and sectors might be announcing earnings that week. You don't need to get caught off guard by a company you're trading announcing earnings without you knowing about it.
After reviewing the calendars, I move into charting. I begin with a chart of the S&P 500 to see what condition the entire market is in. Has it been trending up? Trending down? Shifting sideways? This can help me set my trades up.
I prefer about seventy five percent of my trades to be in the direction of the markets. If the market trend is bullish I want most of my trades to be bullish.
I permit the bullish market pull my trades along to grant me a greater success rate. I also diversify by selecting stocks which are bucking the overall market trend. For instance, in bullish markets I attempt to find the stocks and sectors that are the most bearish.
I put about twenty five percent of my trades in those plays. When the market reverses, these bearish plays turn out to be very big winners for me.
That is merely just the start of my planning. If it is all too time consuming for you to take on, seek the assistance of an investment professional. They can help you plan ahead appropriately. Simply search: merger acquisitions, companies go public, or company go public. This is the most efficient way to make money.
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