By Cliff Clark
Do you know who you are? Are you successful at trading yet? What's holding you back? I assume most of you have a trading plan, right? Well with regard to this article it doesn't matter whether you have a trading plan but aren't making money or you don't have a trading plan but are ready to get started on making one, let's see if we can help get you on the right track.
There are many different trading styles but everyone isn't suited to each trading style. Different personalities are better suited to trade with different styles. If you enjoy sitting in front of the computer screen watching the every tick in the market all day long, you may prefer day trading. However, if you don't like to sit around or can't look at your computer screen all day, you might be better suited to swing or core trading. Neither style is right or wrong. What is key is finding the style that suits your personality and lifestyle.
When I learned that finding a trading style that matched my personality is one of the most important factors in whether I would succeed or fail I wasn't sure I wanted to believe it. Why is that? Because if that was the case I'd have to do a deep dive to find all of my flaws. What were the things that were holding me back but that I was afraid to admit? We are all human and it's hard to imagine we are not perfect. In any case I needed to figure it out so I would know how to make a trading plan that I could live with. I knew I didn't have the patience to hold positions for long periods of time so I decided to frame my plan based a short term trades where I wouldn't have to sit through very many pullbacks.
So some the questions you should ask are:
Do you have to stare at every position every minute of the day?
Does every little pullback give you grief?
Perhaps you have the patience to hold a trade for days or weeks without tinkering?
When I started creating my plan, the first two bullets applied to me so I knew that I needed a plan where I would be in and out of positions in the quickest amount of time. If you have more patience perhaps swing trading or day trading from higher time frames would better suit you.
Whatever your personality type is you will have far more success if you map your trading plan to your personality type. And don't fear, you can work on your personality over time. When I started trading I was lucky if I could hold a trade for 10 minutes. I no longer have that issue, at least to the same degree. I am now successful at trading all time frames.
So to end this, figure out what makes you tick, then you'll know what type of a trader you should be!
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.
