The Trading Tip That Increases Odds of Success...

The Trading Tip That Increases Odds of Success... By Jack Carter, Founder, Jack Carter Trading 2021 should be a great year for trading stocks. As we look ahead, I want to share a simple but important pointer with you that will help you be more successful. It's about having a plan. And the most basic plan you can have is to decide when you are going to sell a stock that you decide to buy. In other words, you need to have an exit strategy. What's crazy to me is that most people don't have one when they buy stocks. Of course they buy thinking the stock is going to go up in value. But how much profit are they expecting to make from the trade? What will they do once the stock goes up? Perhaps even more importantly (from a risk standpoint): What will they do when the stock starts to go down? Do Not Make Trading Decisions Based on Your Emotions Why is it so important to have an exit strategy? Because when you don't, you are setting yourself up to make a decision based on emotion, and not logic. And that's a great way to get burned. In fact, the worst thing you can do is make a decision to sell once the price has already gone up or down. On the other hand, if you have an exit strategy, you are far more likely to reduce risk and make successful trades. How to Make an Exit Strategy Find a stock that you're interested in. One I've been looking at is CROX: Let's say you are able to buy the stock at $62. Before you even make the trade, you have to have your exit strategy in mind. In this case, when to sell if it moves higher, and when to sell if it moves lower. In this case, we're going to target an upside of $69. That means according to our plan, if and when the stock goes up in value to $69, you lock in a profit of $7 (times however many shares we choose to sell). If the stock starts to drop, you can limit your downside by establishing a sell limit. In the case here, if you set a sell limit of $56, then you won't lose more than $3 on the trade if it doesn't work out. It's important when you place a sell limit that you make sure it's beyond the stocks normal trading range. That way, if the stock were to pull back a little bit before rapidly increasing in value, you won't miss the opportunity to make a profit on the upward action. When you make the order in your brokerage, you can place both of these sell orders in at the time you buy the stock. In other words, you can have your plan set when you buy the stock This is called a "One Cancel Other" order, since once the stock's value meets the criteria of one of the two sell orders, the other one is cancelled. Trending Higher In the case of CROX, you could feel pretty confident that the stock will continue to move higher based on what we see in this trend chart. The stock price is consistently higher above long-, medium-, and short-term trends lines. Being able to see a stock's trend lines is one of the best ways I know how to have more confidence about the trades you execute. This is especially the case when you are trading using the "buy high and sell higher" approach to stocks. This approach is a favorite of mine, as my subscribers know. The trend lines are so easy to see in this chart. I pulled it directly from my TrendPoint software. My subscribers love it because it's so easy to use. It makes it a lot easier to make an exit strategy when you're buying a stock. If you're interested in checking out my TrendPoint software; Just follow this link and watch the full hour long presentation. It's a great tool to have as we look ahead to what should be a great year for trading in 2021. Talk soon, Jack IMPORTANT: Click Here for our Full Risk Disclaimer

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