The three critical components of a trading plan are entry, risk, and goal for your trade.
Because they're the only things you can control as a trader.
The stock and the market will do what it wants. And you have to make a plan, and then react.
And since penny stocks move fast — you can get big upside moves, but also downside moves just as fast.
So my solution to avoid getting caught in big downside moves — and the big losses and feelings of wishing I was out of a trade that comes with them — is to set realistic profit targets.
Traders love to fantasize about catching the entire move in big gainers like AMTD Digital Inc. (NYSE: HKD) back in July when it went from roughly $13 to $2,550 over a two-week short squeeze…
Or even CXApp Inc. (NASDAQ: CXAI) recently when it went from roughly $2 to $21 in two days…
And GSI Technology, Inc. (NASDAQ: GSIT) on May 12 when it went from $2 to $7.30 in two days.
But you can't try to extract every penny of a move…
That's why my profit goals for trades are always conservative.
On Thursday my goal for my top watch, Enveric Biosciences, Inc. (NASDAQ: ENVB) was $3.10 — it went to $4.48.
So you missed a bit of the move — who cares? It's better than the alternative…
On Friday my goal for GSIT was the $7.21 Oracle level. It went higher to $7.30, but then it slammed back down to $6.75.
Those are the kind of moves that conservative goals help you avoid getting caught in.
What new traders should try to do is focus on small losses, small profits, and building consistency.
Once you evolve as a trader and grow a larger account — that's when you can start scaling out at your goal and letting some of your position ride if you want to.
But in the beginning, focus on making solid trading plans and consistent small gains that can grow your small account over time.
Set realistic profit goals, and be happy with small gains.
It's not what most traders want to hear — but it's what they need to hear.
Remember this on your Money Monday.
Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade
Post a Comment
Post a Comment