Finding Your Way Out of the Confusion!
By Cliff Clark
Recently I posted an article “Is Education Important to Your Success?”, if you missed it you I urge you to go give it a read.
Let's say you thought the article was brilliant and you ran out and purchased PTS and studied it for a week straight. Now you are sitting at your trading station totally dazed and confused. All you see and a bunch of red and green candles and flashing numbers. You feel totally lost and have lost all sense of what you just studied.
What's the problem? You probably didn't create a trading plan or if you did you probably tried to include everything that was included in PTS. If you try to proceed with either of these situations you are doomed to fail. Our brains can't possible comprehend all of the information in PTS in a very short amount of time. It's going to take you months if not years to digest all of that information.
My suggestion is to break it down into small segments. Do this through your trading plan. Pick one strategy from PTS. Then pick a money management that you feel comfortable with. Along with your money management pick a risk amount. This should be an amount small enough that you can handle losing it because you will early on. I'd recommend $10, but definitely not more than $25. Picking a small amount for your risk will take away the psychological strain we all feel at times in trading and allow you to learn the strategy you are focusing on. At this early stage feel free to change and experiment with different management styles. That is the reason for keeping your risk small.
Once you find a management that you are comfortable with you can then begin to raise your risk in small increments. Likewise when you are confident that you have become and expert with your one strategy add a second one. When you add that second strategy it's back to $10 risk for that strategy, the first one can be kept at whatever your current strategy is. Proceed in this way and within a few months to maybe a year you should be able to master most of the strategies in PTS.
I think your trading plan should also have defined goals but I'll discuss that in another article in coming days. I'm not fond of dollar goals. Goals can make us focus on the wrong thing, “money”, which poses a lot of problems for new traders, more on that to come.
Remember as a new trader you have a lot of materials to learn and master in addition to PTS. You have to learn your platform, you have to learn about trader taxes and countless other things. That's why it's important to take it slow. Document everything that you do, that way nothing falls through the cracks. Trading is a business, you are an entrepreneur, it's now time to act like a professional and do things the right way.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
