One of the most crucial items that helped me become consistent was MINDSET. It's easy to get caught up in the entries & exits, what stocks people are talking about, what looks good, what setups you should be looking at, what the price action is saying.....and the list goes on.
Take a step back and really think about what is required for you to make money in a stock position.....
The simple answer is, if you are buying a stock, the stock needs to go up. The more it goes up, the more money you make. Rinse and Repeat.
Now keeping in mind we have established a big picture of what needs to occur in order for you to make money, let's breakdown how you can achieve this.
1. CREATE A TRADE PLAN. e.g. I will buy here, sell here if it goes against me or exit when price has hit my trailing stop.
2. Follow the plan.... Buy the stock when your criteria has been met. Set a stop loss at a point where you no longer want to be in the stock if it goes down. Trail the stop loss higher if the stock moves further in the anticipated direction. Exit when your stop loss price is triggered.
3. Record the trade outcome and move on to the next.
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| Trade plan to buy and sell stock |
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| Trade doesn't work out according to plan and you exit the position |
The key is to remain objective at all times. Don't worry about the outcome of a trade. You will have many trades over your trading career. Focus on sticking to the plan you created, the plan that was to exit losing trades quickly and let winning trades move higher.
Look at the trade outcomes after a series of trades (30-50 is probably a reasonable start) and that will give you an idea if what you are doing is working or needs to be tweaked.
The only way to really achieve some consistency is to keep it simple and focus on the big picture. Plan the trade, trade the plan and record your trades. If you buy a stock, it needs to go up for you to make money. Put yourself in a position to sell at a small loss if wrong and sell with a larger win if right.
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