Tuesday, July 5, 2016

Trade Plan



In my weekly blog, I highlight and share with my followers stocks on my watch list. It is a short list of 10 stocks or less. These are the best of the best candidates that have an RS rating of 90 and above and trading above the 21 day ema. They are stocks that are highly favoured by the institutions and they trade over $100 million daily. These stocks tend to be less volatile and the ones I prefer to trade because of their liquidity. 

In the month of June, I was asking my followers to do Virtual Trades (trading on brokers virtual platform without actual money at risk) to get practice at trading before actually executing a real live trade. I laid out a trade plan with entry price, profit target and a loss exit target for 19 stocks during the month. Some of my followers were sharp enough to follow the trade plans and adjust their profit targets up with the use of trailing stops. There were others who had losses of 3% to 4% but did not follow the trade plan for losses. They ended up with losses in excess of 10% and decided to just give up on the market. Planning a trade and trading your plan is the key to success in trading. One of my students made a remark to me a year ago  "No Plan, No Trade" 


Summary of Performance in June


I am a firm believer of Trade Plans and I just don't execute any trades until I have firmly established attainable profit targets. All stocks are bad unless they go up. Stocks performance is at the whims of the market conditions and that can change at a moments notice. Three weeks ago we had a pathetic jobs report and two weeks ago we had to deal with the uncertainties of Brexit. Lot of good stocks rolled over but than again some of them went counter trend. Last week US market made up all the losses that we suffered in the previous week. This week I thought it might be a good idea to share with my followers, all the successes and failures of 19 stocks that I shared last month with my entry and exit targets.

Losses: (closed)
  1. $EDU  -3% 
  2. $NTES -4%  
  3. $AYI   -3% 
  4. $FB    -3% 
  5. $CTXS -3%
  6. $ZBH  -3%
  7. $MAS  -3%
  8. $AVGO -4%

Profitable:
  1. $MXL  +6%
  2. $ALGN +5%  (open)
  3. $BGS  +8%   (open)
  4. $DG   +7%   (open)
  5. $OKE  +8%   (open)
  6. $AU   +19% (open)
  7. $ABX  +12.6%(open)
  8. $AEM  +14.7%(open)
  9. $NEM  +15.3%(open)
  10. $GDX  + 15.6%(open)
  11. $SLW  +27%  (open)


Lessons Learnt


There were 19 stocks that I highlighted with specific entry point as well as profit and loss targets. I had a 47% loss rate and 53 % win rate with my stocks. It is just like a coin toss (50/50 chance) but I managed to have my losses controlled within my loss targets and managed my profit targets to take advantage of stocks that continued to trend higher. 

There were 8 stocks that amounted to losses of 26% and were closed off with contingent orders in place. This way I got my emotions out of the way and just allowed my trade plans to get executed. I had also 11 stocks that amounted to 138% profits. Most of those trades are still open with a trailing stop in place. Overall I am showing 112% return for the month. The most important lesson that I learnt in June is:

  1. Keep your losses 3% - 4% from the entry point
  2. Plan profit targets 6% - 10% from entry point
  3. Trade only stocks that are trading above 21 day ema
  4. Trade stocks that have an RS ratings of 90 and above
  5. Use trailing stops for stocks that have attained initial profit target.

My Stock Watch List

  • $NVDA ($47.64)
  • $SJM   ($147.51)
  • $DLTR  ($92.27)
  • $MO    (66.23)

Currently $SPY is approaching 211 which is a major resistance area. Market is in a confirmed uptrend according to IBD and one has to be prepared to enter the market with small positions initially. We also have earnings season with $PEP and $WBA reporting this week. 

Happy Trading!


Amin 









DISCLAIMER



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.


The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.


YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A LICENSED PROFESSIONAL. You understand that you are using this Information AT YOUR OWN RISK.