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Sticking to the Plan

  
  Education
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A Trading Plan only has value if it is utilized as intended. It does you no good to have one if you do not stick to it. We all know this, yet traders find reasons to deviate from their Plan, almost always with negative consequences. Why? There are several reasons.

  • The Plan does not match the trader: A Trading Plan is a personal thing intended for a specific trader, based on her/his personality and circumstances. If it is not created honestly based on reality rather than hope, then it will not match the trader, and likely it will be neglected.
  • Lack of Patience: Trading Plans are intended to be long-term, at least relatively so. Many traders give up on their Plan, or often more specifically the trading system in the Plan, after a period of sub-par performance rather than sticking it out through the inevitable rough times.
  • Lack of Discipline: Trading according to a plan requires continuous performance of a set of actions in a proscribed manner. Doing so takes discipline. Traders lacking discipline do not stick to Trading Plans. (The word “discipline” is probably the most frequently used in regards to trading success.)
  • Self-Destructive Behavior: Sometimes traders have deeply ingrained issues of a psychological nature which tend to sabotage them. It is something which can be overcome with work, but first it must be recognized and addressed.

These are not the only reasons traders fail to stick to Trading Plans, but they do represent a large portion of the explanations for it happening. The point is that a Trading Plan is little more than a document if not put in to practice.

I hope this sequence has been helpful to you. Definitely feel free to drop me a question or leave a comment with your thought, experience, or ideas on the subject.

Ten Ways to Trade Like the Legendary William J. O’Neil:

  
  Education
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  1. Do not diversify broadly, instead focus on the leading stocks in the best industry groups.
  2. Cut any loss when the stock is down 7%/8% from your buy point.
  3. Buy stocks that are going up in value, not down.
  4. Add to a position as the stock goes up in value from your buy point not at lower prices.
  5. Buy stocks near their highs for the year not their lows.
  6. Study price charts to discover how the best stocks behaved historically in price action.
  7. Trade in the right direction based on the trend of the general market.
  8. Buy the best stocks in the market as they break out of properly formed bases or when they bounce off their 50 day moving averages.
  9. Do not be influenced by others, trade your plan.
  10. Buy stocks with the best earnings and sales growth at the right time using charts.

Trading Quotes

  
  Education
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Human emotion is both the source of opportunity in trading and the greatest challenge.
Master it and you will succeed.
Ignore it at your peril.

Trade with an edge, manage risk, be consistent, and keep it simple.
The entire Turtle training, and indeed the basis of all successful trading, can be summed up in these four core principles.

Good trading is not about being right, it’s about trading right.
If you want to be successful, you need to think of the long run and ignore the outcomes of individual trades.

Trading with an edge is what separates the professionals from amateurs.
Ignore this and you will be eaten by those who don’t.

Edges are found in the places between the battleground between buyers and sellers.
Your task as a trader is to find those places and wait to see who wins and who loses.

Mature understanding of and respect of risk is the hallmark of the best traders.
They know if you don’t keep an eye of risk, it will set its eye on you.

Ruin is the risk you should be concerned with the most.
It can come like a thief in the night and steal everything if you’re not watching carefully.

Don’t spent all your time admiring the fancy tools in the magazine.
First learn how to use the basic ones well. It’s not the size of your tools that counts but how you use them.

Keep it simple. Simple time-tested methods that are well executed will beat fancy complicated method every time.

Trading with poor methods is like learning to juggle while standing in a rowboat during the storm. Sure, it can be done, but it is much easier to juggle when one is standing on a solid ground.

Trading is not a sprint; it is boxing. The market will beat you up, screw with your head, and do anything it can to defeat you. But when the bell sounds at the end of the twelfth round, you must be standing in the ring in order to win.

The market does not care how you feel. It will not prop up your ego or console you when you are down.
Therefore, trading is not for everyone. If you are unwilling to face the truth about the markets and the truth about your own limitations, fears and failures, you will not succeed.

I always say that you could publish my trading rules in the newspaper and no one will follow them.
The key is consistency and discipline. Almost anybody can make up a list of rules that are 80% as good as what we taught our people. What they couldn’t do is give them the confidence to stick with those rules even when things are going bad.

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