Knowing When To Place a Trade And When Not To

Knowing when to place a trade and when not to place a trade, boy that’s a tough one. But I think I will go ahead and give it a shot anyway. I have been at the receiving end of tough days where I look back and said, “Wow did not need to take that trade,” or “shouldn’t have taken that trade.”

You know what I’m talking about if you’ve been trading for more than a week.

Listen, it’s tough to know when you shouldn’t place a trade, and at the same time, it’s really easy.

Do what?

Yea, I know it seems contradictory but the fact is when you have a plan and you follow a strategy and you narrow down the stocks that you want to trade that day, you already know where your entry and exit are going to be.

If you don’t know, then you don’t trade it.

Seriously, if you don’t already know where you want to enter the trade, and then assuming you end up entering the trade, if you haven’t already planned where your first exit is going to be, or your second, etc., (this is about scaling in and out of positions), then you are not ready for the trade.

Whether you are right or wrong in the trade does not matter. It is about what your plan is. If your plan works, great, you’ll make money. But if it doesn’t, what will you be doing when the trade goes against you? What is the loss you are willing to take for being wrong?

You must know what your profit goal is as well as what your stop-loss is. No, you don’t have to enter a stop-loss order ahead of time (although if you struggle with risk management, by all means, enter a stop-loss order as soon as you are in the trade), usually, stocks tend to swipe into orders and you miss the move so it’s better to give a trade some time to work. Although this means you can’t go “all-in” full size when you enter a trade.

So you know when to place a trade when you have all your ducks in a row.

When you know the size you plan to enter, the anticipated range, and the key levels that you are looking at if the trade goes in your favor, or if it doesn’t. Where do you expect it to hold? Where will you add, or size down your position? If you have the plan in place, and it is something you do consistently, then you already know that you should be placing the trade.

But if you are just waiting, watching, trying to jump on the next mover, without a plan, with no direction, then stop and ask yourself, “What am I doing?”

Do you really want to be a trader, or is this a hobby?

Do you want to make a career out of this and have limitless earning potential, or do you just want to dabble here and there on the next hot momentum stock you hear your buddies talking about on the water cooler (or on the Zoom chat these days)?

It is really up to you.

I think you are better off getting serious about trading because it can change your life. Even an extra $1000 a month, or $1000 a week…imagine what you could do if you could develop the skills, the discipline, the ability to extract money from the market daily, weekly, monthly?

I hope you take the road most people will never get to travel. I am here to help you accomplish that mission.

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  • Succeed for the long term

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