Good Trade Anatomy

Here are ten quick and easy steps to making sure your trade has the best chance of being a winner:

  1. Your trade entry must be at a price level that gives you either a high probability profit potential or a great risk/reward ratio.
  2. You must identify where price has to go to prove you are wrong and then set your stop at that level.
  3. Your position size has to be based on how much you are willing to lose if your stop is hit. 1% to 2% is the maximum loss of total capital you should ever risk to avoid the risk of ruin.
  4. If your trade becomes profitable you will have to have a plan for a trailing stop to lock in profits on a reversal or a price target to lock in profits when it is hit.
  5. Your trade must be based on a detailed trading plan. You must operate inside a set of rules.
  6. Your trade must must be made inside a profitable trading system to have any long term meaning.
  7. Trades must be based on reacting to what is happening not predictions.
  8. Trades must be based on quantifiable facts not emotions or ego.
  9. Always trade based on your own time frame.
  10. Never piggy back another persons trade. All of our trades are our own win or lose.