Posted by twobits > 2015-06-18 13:52 | Report Abuse

Before you take any new position on stock, you need to make a plan on your trade. And you trade with your plan with DISCPLINE. Whether you are pro or newbie in FA, TA, PA, SA, AA, AIA, A+ or A-, you always plan before you trade. This article is mainly for those who trade without plan all this while. What is trading plan? If you are buying a stock at RM1.00, you have to plan how much losses u are willing to absorb for this position. IT IS NOT how much profit u are going to win for this trade. Be it 5% or 10%, u have to trade with a trailing stop plan. This is the 1st and fatal mistake for those who trade without a plan. If u have set your cut loss price at RM0.80, u just cut it when it hit that level without hesitation. U dont wait and hope that the downtrend is temporary and it will rebound soon. 80 to 90% it wont. U will dig a bigger hole for yourself till your saving is gone! The key point here is PRESERVING your capital so u can live and fight another day. How to set your cut loss level? 1) resistance and support, Fibonacci, trendline, elliot wave and etc. What are those? Please google. 2) you can just set your own cut loss level without looking at TA or FA. 3) any level once it breached will discrupt your daily routine or mental cycle. How to set your profit target? 1) same as no.1 of cut loss plan. 2) Assuming you are buying 1000 shares of XYZ at RM 1.00, you can sell at rm 1.20 if thats your desire target. Or you can sell 500 share at rm 1.20 and let the profit run or trend is changed for the remaining 500 shares. if the price didnt no go higher but come down, then u have to set your break even point to close the remaining 500 shares. 3) Forget all the price target set by research houses. There are excellent write ups by matrixcool in technical code breaker on trailing stops and trade plan. Go browse through their past messages. Again, its not easy to trade with your plan. Thats where DISCLIPLINE comes in. Lastly, u need to learn how to cut loss before u can start earning money in BURSA. U dont have to trade every day also cuz there is LIFE besides bursa. +ve comments are welcome. Negative comments by flaggers or keyboard warriors are also appreciated! Have a good trade!