Why oh why can't I stick to my plan ?

C

cicsman

I'm sure this is a pretty common thread with beginners.

My problem is that I plan out my trades but sometimes don't follow the plan with the inevitable result i.e big losses.

An example: I spotted a stock (using candlesticks) that was moving up nicely and approaching a previous gap. I determined that if it filled the gap I would buy into it. Yesterday the stock started moving up and I ignored the plan and took the plunge early, before it filled the gap. The result, it immediately turned around and plummeted resulting in a big loss.

So the $64k question, are there any tried and tested methods which I can use to force myself to stick to my plan ?. Or am I screwed ?. By the way I've read Mark Douglas but I guess his advice didn't work too well for me.

Thanks in advance.
 
you feel the need to trade for excitment -> program your brain to trade for money, if that is, what you want? and remember a good trade is hard to get into.
 
Quote from cicsman:

I'm sure this is a pretty common thread with beginners.

My problem is that I plan out my trades but sometimes don't follow the plan with the inevitable result i.e big losses.

An example: I spotted a stock (using candlesticks) that was moving up nicely and approaching a previous gap. I determined that if it filled the gap I would buy into it. Yesterday the stock started moving up and I ignored the plan and took the plunge early, before it filled the gap. The result, it immediately turned around and plummeted resulting in a big loss.

So the $64k question, are there any tried and tested methods which I can use to force myself to stick to my plan ?. Or am I screwed ?. By the way I've read Mark Douglas but I guess his advice didn't work too well for me.

Thanks in advance.
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the market is very good at tricking us into changing our plans.
 
Quote from cicsman:

I'm sure this is a pretty common thread with beginners.

My problem is that I plan out my trades but sometimes don't follow the plan with the inevitable result i.e big losses.
More...

Two paths lie in front of you.

You will either get sick and tired of losing or you wont.

Blow out or blow up...your choice.
 
Quote from cicsman:

An example: I spotted a stock (using candlesticks) that was moving up nicely and approaching a previous gap. I determined that if it filled the gap I would buy into it. Yesterday the stock started moving up and I ignored the plan and took the plunge early, before it filled the gap. The result, it immediately turned around and plummeted resulting in a big loss.
More...

Hi, cicsman.

What stands out to me from your post is that there is no mention of a planned stop loss. In addition to your entry point, before you open your position you should know where you're getting out for a profit (on at least part of your position) and where you're getting out to cut your losses. Good entries are relatively easy; good exits are the hard part. It's important to follow your plan, but it's more important to have a complete plan (not one-third of a plan) before you put on a trade.

Just from a technical standpoint, if you're trying to trade in the direction of an expected break of support/resistance (S/R) you should keep your stops relatively tight. If the market doesn't break that level, then it is likely to rebound from it aggressively and as a consequence strengthen the significance of that level as S/R (reducing the odds on your planned trade). Also, the price action you're seeing in the candlesticks should be confirmed by another means, such as a surge in volume.

Regards,
 
My guess is that your "plan" doesn't allow you to be actively enough involved in the market. If you only have one or two chances (according to your plan) to make money each day, you'll inevitably screw it up.
 
I don't see how one or two chances to make money each day raise the odds of screwing it up. It all depends on teh way you trade, if i can find five good set-ups a week, I'd be happy. But i have a longer time frame.
 
Quote from JangoFolly:

Hi, cicsman.

What stands out to me from your post is that there is no mention of a planned stop loss. In addition to your entry point, before you open your position you should know where you're getting out for a profit (on at least part of your position) and where you're getting out to cut your losses. Good entries are relatively easy; good exits are the hard part. It's important to follow your plan, but it's more important to have a complete plan (not one-third of a plan) before you put on a trade.

Just from a technical standpoint, if you're trying to trade in the direction of an expected break of support/resistance (S/R) you should keep your stops relatively tight. If the market doesn't break that level, then it is likely to rebound from it aggressively and as a consequence strengthen the significance of that level as S/R (reducing the odds on your planned trade). Also, the price action you're seeing in the candlesticks should be confirmed by another means, such as a surge in volume.

Regards,
More...


Interesting advice, Jango. Something for me to dwell on.

A planned stop loss is something I do have actually. Of course again my "gut instinct" sometimes makes me ignore it, usually to my peril. The problem here stems form the fact that I had a couple of big wins early on from stocks that rebounded from a position lower than my original stop loss. So that has made me too flexible at times in relation to stops. But on the plus side I recognize that failing and I'm working hard to change it.
 
It's funny you should mention this as I am re-wroking my trading plan and it is written.

You lack discipline and are looking for excitement. As I have posted before trading should be boring not exciting as it would be for a professional card counter. They don't gamble and either should we. Maybe you need to set aside some play money to go to Vegas or something.

Part of my new plan is very strict. I have written into my new trading plan that if I stray off plan for that day my wife has the authority to suspend trading and put me on the simulator until I follow my trading plan. We have daily updates on how my trading went for that day. This is something I enacted to keep me on plan since I am new to this game. All of the most succesfull people on this planet have a plan and follow it, why don't you ? Get it through your head now. Discipline or disaster, it's your choice.
 
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