Good Day Rookie Traders!
We have covered a lot of ground in the few episodes of this blog. We have placed a successful long call trade and we have gone through how to properly follow through on the trade. We also worked on our belief systems to enhance our results. So what’s the next step? At this point, we need to go back to the well to find a new trade. We have some work to do before we get to that point. Before we do that let us take a look at how our GRUB trade played out.
When we put our long call trade on in GRUB we did so because we believed that it could move far enough and fast enough to put our call in a profit position. It moved up nicely from our entry point, as a matter of fact, it moved up almost twenty points from entry. This increased the value of our call and at some point, we would have been stopped out at some point. We talked about some possible stop points in a previous write up and if you managed to stay below those points today’s movement definitely would have stopped you out as it dropped about nine points which is over twice the ATR of this particular equity and all the stop loss techniques we use would have been stopped out and left us with a nice profit position. This completes this trade and now on to the next, that is how trading works. Let’s go hunting for our next trade!
Before our next trade, we need to follow the steps to successful trading. We have talked about these steps before in this blog and we are going to recap them just to make sure we are clear on our process, as we must trust the process.
To be successful in trading we need to begin at the beginning and that means we need to know what the overall markets are doing so that we can pick the best trade for the current conditions. Once we understand the current conditions we can then choose an appropriate strategy. Some strategies work well in high volatility environments and some work well in low volatility environments and we must consider this before choosing our trade. After we pick a strategy then we need to look for the right candidate to fit that strategy. It must be liquid, it must be the right pattern and it must have the appropriate risk/reward parameters before we would be willing to trade it. When we have gotten to this point the only things left to do are to plan our trade and execute our plan. This involves figuring out where to enter and where to get out and of course when and if we will adjust the trade.
Take a look at the video below to see the progression of a trade and see what kind of opportunity we can find in the market today.
Happy Trading!
