Stock Trading

Pulling the Trigger

Does anyone else struggle with pulling the trigger on a trade? Always seems like too many options and I can't decide on which one to do.

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This is a question that a lot of new traders struggle with. There are some simple steps to get you past this, and once you do trading will become almost robotic. That's what you ultimately want, to take away the emotion.

 

  1. Develop a system. You should start with one basic trade setup that you like, then look for specific examples. Maybe you like to buy stocks as they make a new high. Maybe you like to buy them when they make a double bottom. Whatever your system, stick to that, for now. Eventually you will develop a number of setups that work for you, and by that time you'll have the experience to eliminate the indecision you currently struggle with.
  2. Know where your stop is and stick to it. Knowing what your maximum risk is will help you to pull the trigger. For one, you can't know what size trade to make without knowing your stop, and you can't know your reward-to-risk either. These are two key components to any trade. Of course, a stop is only good if you stick to it, so STICK TO YOUR STOPS!
  3. Trade within your means. You'll never have enough money to trade every possible setup you see, so instead focus on the best. Sure there will be trades that get missed along the way, but don't beat yourself up over those, there will always be more.
  4. Focus on % instead of $. When all you are seeing is dollar signs it is hard to remove emotion. If you are seeing a trade's profit or loss as a car payment you aren't going to trade based on your system or the chart, you are going to instead close good trades early, or worse, not stick to your stop to cut off a loser. By focusing on percentage you should be better able to just trade the chart based on what it is telling you.

 

As long as you know you've followed your system, entered a strong setup, have a good stop and a realistic target in place, you should be able to hit trades with very little stress.

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