How to make full use of trading plan and analysis? [Video]
|“What do you mean by let the market play out? I though you are bullish!” This is a common question I get from time to time from readers.
A lot of time, I tend to respond with “stick to your trading plan and let the market play out” despite I have formed a directional bias with my analysis.
For example, If I am bullish on Stock A based on the analysis of the characters of the price action and the volume, I will still consider the opposite case (or the failure case).
Some of the questions i would ask myself
1. At what point my analysis will be invalidated and turn bearish?
2. What are the characters of the price action and volume would I anticipate for a failure case?
My trading plan is to prepare for both scenarios despite it is very clear that there is only 1 scenario plays out at the moment. My trading plan helps me to react and execute according to how the market move, rather than to prove me right. It needs to help me to get out when the market doesn’t agree with me.
So, analyze the charts as usual and have your trading plan ready so that you will react and execute your plan accordingly and comfortably. Meanwhile, watch the video below to find out how I analyze penny stocks with pure price and volume analysis:
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.