Table: Trading Plan
What knowledge I can share from this simple table? You might said it is simple and there are no knowledge that can emerge from it. Please remember the main concept for share trading market namely the efficient is coming from simpler methods. Thus, let me introduce that knowledge and skills that you must be learn from here and make a step towards a disciplined and successful share trader. Before I start, u must obstinately remembers that there is no any predictions for the share market and "share win" in your trade has been involved. The prediction only will make your judgment to be more complex and confusable and finally leads you into a dangerous situation. Therefore, please do not be a victim of the useless prediction because we are surrounded by uncertainty and what actually we should concern is the real and present trend of the market.
Every time when you buy a share, I suggest u draw a similar table as above. By doing so, you can establish a limit line (stop loss) and it help you control your action without affected by any psychological factor. Another important element in the table is the first stop loss and take profit. Both of these elements you must set instantly after enter into the share market.
From the candlestick chart above we can find three types of different prices which are entry price, target price and stop price. The stop price will send you a message to leave the market immediately when market price reached the stop price level. For instance: RM 2.70 as a stop price. Please follow the strategy that has been set initially and leave the market after market price dropped over the stop price. Thus, don’t be a naive trader to expect the price will recover and it will make u fail in the share trading. As an investor, we must try to minimize the loss but not always look of the profit because profit is built on a strong management for your loss and capital preservation.
According to the figure 2, it shown a mistake make by an undisciplined trader when he/she hoping that the market will recover after it s sharply drop over the first stop loss which set initially, that is the red colour line in the figure. Finally, she/he will obtain the unwilling and heavy loss. For instance, if you enter the market with RM2.90 per unit and u bought 1000 unit and the totally payment is RM 2900 without the broker fee. I assumed u is a disciplined trader and you will close the market when reach the first stop price level with a totally loss of RM200. However, some of the trader will hope the trend or price will recover after the downward market trend. As a result, it is always contrast with what people expect the market price is continually dropping and it will make the trader afraid and regret for their mistake. For example, they stop the market below the stop market price with RM 2.50. Therefore, total loss will be RM400 and lost more RM200 than disciplined trader.
Similarly, when the market price reached the take profit/ target price and u better sell and closed the market. As we know that exceeding greed and hope will erode our profit initially. As a result, we can persistently make the profit for share trading market.
Finally, please establish a plan before enter into the share trading market and be patient and disciplined with your plan that set initially. Besides that, remember there are no prediction and doubt in share trading market. Therefore, the present market trend is the only one we can believe and just focus what the market doing now.
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