Very few things suck as much as watching a winning position turn into a losing trade.
It rarely happens to me, but I see it happening to many newbs.
Because when it comes to my trading, I’m flexible.
I’m constantly digesting information in real-time and making adjustments along the way.
For example, I would have been sitting on some hefty losses on Monday if it weren’t for my thinking last Friday.
We are all taught to stay disciplined…but when does it make sense to change the plan and make adjustments?
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Why I Stay Flexible
Last Friday, I jumped into the ticker symbol IPA.
I bought this spiker on dip off the highs because I believed it would pop again. The company tweeted it had big news coming next week, so I figured there was a chance the stock could catch a bid.
— IPA (ImmunoPrecise Antibodies) (@ImmunoPrecise) May 12, 2023
I bought 3,000 shares at $3.35 in the afternoon, thinking it could run higher…
The plan was to hold these shares until Monday.
However, I felt I had to take profits with the stock surging. And I did, getting out of 2,000 shares at $3.82.
With 1,000 shares, the plan was to hold the rest into Monday. But with the stock trading well above $4.00, I felt like I should take my profits and call it a day. And that’s what I did, getting out at $.4.07.
It turns out that it was a good decision.
The stock didn’t do anything on Monday. In fact, it sold off by 30%.
When Should The Plan Change?
My trade plan for IPA was initially to hold the trade until Monday. But with the stock hitting my profit targets early, I decided to take the trade-off.
But that’s not the only time I’m willing to adjust my trading plan.
For example, I’m constantly watching what the market is doing.
If I’m in a trade that has a bullish setup, I’ll also be watching the overall market. If the overall market is weak or there is heavy selling pressure, that might impact my trade.
I might not get in…I might get in, but size into it small…
Not only did my profit targets hit in IPA, but the overall market was selling off, making it easier for me to decide to get out.
The bottom line, there are other factors you should consider.
If I’m trading a hot sector, like AI.
I’m watching how other AI stocks are performing. In most cases, I want to go with the trend, not against it.
How I Stay Flexible
- I am staying Informed. Not only am I aware of what the stock I’m watching is doing, but I’m also paying attention to stocks in the same sector, market news, and how overall stocks perform.
- Watching my levels. Call me old school, but I like looking at charts and using areas of support and resistance to guide my entries and exits.
- Cut losses quickly. I have an idea, but I’m out if that idea is wrong. There’s no reason to be stubborn and fight the trade.
Following a rules-based trading approach is probably best if you’re a newbie trader.
As you gain more experience, you’ll learn when to adjust your trading plan.
If you’d like to learn how I found the ticker IPA last Friday, this is the strategy I used.