Trusting Your Stock Trading

The team at High Chart Patterns, which offers stock trading newsletters based on stock chart analysis, wrote in with their thoughts on trusting their trades.

One of the most important and difficult things to learn as a trader is simply to trust yourself. By this we do not mean that you should be stubborn when a position goes against you, or heaven forbid, average down. Once you enter a trade then all opinions, feelings, instincts, et cetera, must defer to simple risk management and profit-taking rules. What we mean by "trust yourself" is something that is critical BEFORE you enter a trade.

Last night, we went through the charts of our favorite momentum stocks and saw absolutely nothing we liked, thus we did not post a single stock in our Main list. Now this happens only 1-2 times a month, hence it is not a common occurrence. Today the market hurt a lot of bulls and a lot of bears and most likely it would have resulted in losses for any positions that we would have entered with our particular system. So was it a coincidence? We doubt it, since we have seen it happen too often. When you are doing your preparation work for the next day and nothing jumps out–be it longs or shorts–know that most likely the next day will be a very difficult one.

Let's look at another example. Every day, we have a main list of stocks with specific entry prices that we watch.   Sometimes we find ourselves in a situation where none of these stocks on our list are close the triggering but the market suddenly spikes and looks like it’s going to rally 50 points. We get nervous and think—what should we do—the market is going to rally and we have nothing in our list to trade (we only trade stocks from our list prepared the night before, and shared with our subscribers). More often than not, that initial move is nothing but a bull trap and the market reverses.   In our experience, we have found that if a market move is for real, i.e. lasting, then you will already have setups prepared from the night before that will trigger once the market makes a move. Chart patterns are nothing but footprints of the greenbacks, and they will rarely let you down. Trust the set ups, trust yourself, obey your rules of risk management and profit taking, and in the long run everything else will fall into place.