Ideas on how to craft your trading strategy

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The post explores ideas on “how to craft your trading strategy” and how critical it is toward long-time success in the markets. doing so is to their likelihood of success

Perfecting your trading strategy properly will depend upon carefully analyzing your strengths and interests and playing to them. Be brutally honest and truthful with yourself in regards to time, work and family constraints.  You may envision yourself as some day trading baller when in reality trading the daily or even weekly time frame is more suited to your lifestyle as it currently stands. By carefully examining yourself,  then constructing your strategy you tilt the odds in your favor. Here’s how to do it.

The Problem: Markets & Trading can be daunting
Back in the day, prior to the GPS era, I drove into New York City in a rental car for a sales meeting. It was daunting. I got turned around a few times, but I made my meeting. When the meeting was over it was dark and that initial trepidation turned to fear as I tried to navigate myself out of the asphalt jungle.   I made it out, but not without the help of some kind strangers.  I will never forget that day.

In the same way, Markets and trading can feel daunting and scary to the aspiring trader.  With so many stocks, trading techniques and methods, its easy to get turned around.

An Ace in the Hole 

One powerful advantage of trading that often is over looked is your ability to define your own trading game. Imagine a game where you get to define every aspect of it to your advantage.  When you’ll play, the rules of the game,  and under which circumstances you’ll engage the game.  Think about that deeply for a moment.   Wow!  I like those kind of games!   Even to the new aspiring trader, the game shouldn’t be as daunting and scary as it was before.   We can set up the game so that we have the highest odds of winning.  A set of rules that give us every advantage.

 Defining your Game- a few ideas

  • Trade vehicles that Suit your Style    
    • Equities? Bonds? Commodities? Futures? Indexes?
    • There is no right or wrong answer; its whatever suits you.  Take a close at yourself. What interests you?  Investigate them all if you’re not sure. And remember, it doesn’t have to be one .
  • Depth trumps Breadth
    • You don’t need to track 1750 stocks in order to make money.  If you keep track of 50 stocks, truly own them, understand them and how they behave you will have plenty to keep you busy and plenty of opportunities to bank coin.
  • Put time on your Side   
    • What is the right time frame for you?   If you’re a busy professional, maybe trading the weekly time frame makes more sense that trying to keep track of daily fluctuations.    In front of your trade station all day?   Maybe you can take advantage of a quick day trade when the set up is right.
  • Define your Strategy and Playbook
    • If you cant write 3 sentences that encapsulate your trading strategy, you don’t have one.
      • For example: I am an active swing trader that uses technical analysis to locate objective, low-risk trading locations and use options to express a directional view.  Simple, concise and to the point.
    • Know the set ups ( plays ) that you are looking for to execute
    • Execute the plays within your playbook that are in harmony with your game plan strategy.

Here are a few examples of how you’d put it all together.

  • I know a guy that only trades 45 stocks, but he owns them like no bodies business. Technical analysis techniques are combined with a complete understanding of the underlying fundamentals of each company.  As stocks become waterlogged they are periodically removed from the list and others added.
  • I, for instance, cant remember the last time i owned common stock. I’ll trade almost anything, but insist that it has an option chain with reasonably narrow spreads.  I don’t trade stocks under $10.  Just a couple of my criteria
  • Another trader I know has a completely different approach. His portfolio is loaded with divvy payers. He has a low-intensity approach. He looks at his holdings every week or two. He strategically buys dips and exits at certain times to maximize his returns.  He does very well and is able to play golf 4 times a week.
  • Yet another trader I know just uses support and resistance. No indicators at all.  He plays breakouts and breakdowns. If the stock is in a trading range and the range is wide enough, he’ll buy at support and sell at resistance. Rinse and repeat.
  • Have a full time job but still want to actively trade?  Maybe ES micro mini’s are a good fit. The micro mini’s have 1/10 the contract size of the big boy contract so you need much less capital to trade them.  Futures trade nearly around the clock.  Come home from work and settle in, define your entry, exit and stop. With nearly 24 hour trading and ample liquidity, you are virtually assured to get filled at your trade locations.

Just like, there are many ways to get from point A to point B in New York City, there are many ways to win in stock trading.  Certainly an important key is to define a game you want to play. One that plays to your interests, skill level, and objectives.  The more narrowly you define your game the higher your odds of succeeding at it.   The next key is having the discipline not to move outside that box you’ve defined for yourself

Join our Trading Tribe!!

Our group of aspiring traders are into active swing trading using technical analysis to find objective, high-probability,  low-risk trades.  Using these processes we’ve been fortunate to be winning; not perfect but winning. If that is appealing to you, join us!  I’d like to think you’d benefit from the work.  You’ll get premium  content 6 times a week including a copy of my Daily Profit Compass, Weekend Profit Navigator, and Trades about to Happen along with other actionable content delivered directly to your mailbox.

Registration is simple and FREE   Visit our homepage  HERE

Thanks for Reading; Hope it helps

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