How do you find your trades? How much time do you spend analysing the market? Do you use a scanning tool that guides your entries and exits? Do you use technical or fundamental data or both?
One simple way of sourcing trading candidates is to use Trading Edge Dynamics Editors Select Setups. Each week, the Editor runs 2 scans in the Trading Edge Dynamics platform and reviews a ‘Value Opportunities’ watchlist to identify charts of interest for members. As an additional service, the Editor also identifies trading opportunities from each of these 3 sources and highlights them as Editor’s Select Setups. Each identified chart is ‘marked up’ with potential prices for Entries, Stops and Profit targets.
However you find trading candidates, it’s important that you run them through your own trading plan ‘filter’ to ensure that you are consistent with your trading approach.
Trading Edge Dynamic’s members have the opportunity to learn the process of trading and gain an understanding of the importance of managing risk through taking or watching the Editors Select Setups trades.
If you would like to learn more about the Trading Edge Dynamics platform and take advantage of our Editors Select Trade Setups, sign up for a free 14 day free trial.
What are some trading plan filters or criteria a trader might apply?
The criteria and filters in your trading plan will depend on your own trading style. Here are just a few ideas on filters that you might develop into rules that you can apply to any trading opportunities you are alerted to:
- Allocate a percentage of your portfolio to each trading approach – for example, you might have $500,000 investment capital and you may want to allocate $150,000 (30%) to a trading account specifically to trade shorter term and the remaining capital might be used for a longer term weekly investing strategy.
- Choose how you are going to positions size – for example you may want to use a set dollar amount per parcel or you may want to position size using the fixed fractional position sizing method where you quantify your risk in percentage terms for every trade and your positions size will depend on your entry and stop price.
- Decide how you are going to manage your trades – you could choose to exit at profit targets or you could choose to tighten stops when a profit target area is reached and then use a trailing stop method, or you could choose to use a combination of both depending on market conditions – whatever you choose to do, document your choice in a trading plan and be clear about what market conditions will trigger which trade management option.
- Do your analysis outside of market hours and decide which trades offer the best risk/reward ratios and which you are going to take – for example you may not have enough capital to enter all trading opportunities so you may want to apply further technical analysis or some other filter to the stocks to narrow down your choice.
- Document why you are entering the trade and your plan for the trade. Write your thoughts and analysis in your trading journal for each particular trade. Documenting your analysis like this will be an invaluable learning tool down the track.
- Place limit or stop entries in the market for the trades you wish to take or write notes for yourself so that you are prepared when the market opens on the next trading day.
- Each week review your trades and make not of updated stops or profit targets. If you don’t have stop and target orders automatically in the market, check prices yourself each day to determine whether any positions need to be exited.
Learn more about all our easy to use technical analysis tools and take advantage of our Editor’s Select Trade Setups by signing up for a free 14 day free trial.