Stock charts technical analysis
can explain why is important
to never chase trades
Risk management is very important
also for best stock picks
All of my trading setups are based on stock charts technical analysis. The whole process is based on simple steps but the number of these steps is not small. It could look that preparation of every setup is complicated task. But in reality you will see that it is not so complicated - it is simple. But please understand that I am looking for best stock picks available in actual market situation so I do not want to do things in a hurry. I want to make stock charts technical analysis properly. I do not need to find tens of possible trading setups and have many stock price charts saved as my trading setups. My regular routine for stock charts technical analysis is inseparable part of my stock trading system. The basics of stock market chart analysis are used by my method I developed for
selection of best stock and etfs
for stock trading. The process for selection of stock to trade is followed by detailed analysis which should help with setting
entry level
for my trade. The expected
target and exit point
is prepared in accordance with technical analysis of stocks charts. I use stock charts technical analysis also to find good risk level
where to place my stop loss.
This stop loss level is ultimate place where I think that my trade setup idea is already proved wrong and I must exit the trade. All these levels I put into my
risk management
Excel calculator. This Excel sheet produces position size details for my best stock pick trading setup. And when everything pass I put this best stock pick trade setup into my Excel daily trading plan for intraday monitoring. I setup alerts in my
stock trading software
accordingly to be alerted if price move close to my entry level.
Live stock charts shoud warn you
Then trading day begins and sometimes it prepares surprise for me. The price open much higher then my trigger price for entry is. So should I enter trade also on new level much higher then my stock trade setup expected ? The correct answer is no. Trading is difficult enough as it is and as such, our strategy is to always place ourselves in the best possible position to increase the likelihood of a profitable trade. This means that good trader never chase trades and force something if it hasn’t hit our desired level. Stock trading methodology relies heavily on a specific risk/reward that if only tampered with slightly, can result in a significant deterioration to our P&L. We always want to be in a position where if the trade doesn’t go our way (and it does happen), there is no room for excuses and we can walk away completely comfortable with the loss. If prepared entry level is not hit, than good trader is quite happy to move forward to the next trade. The market is there for us each and everyday. Chasing trades always leads to violation of our money management rules which leads more often then not to
larger losses
then we would like to accept. And also there is often opportunity to wait for pullback and prepare new setup with similar characteristics like the former setup was. You can see on these examples of stock charts technical analysis that chasing entry is not always profitable and can lead to big losses.
Arrows on both charts point to levels where stock trade setup for buy entry was prepared. But strong move or initial gap up during trading day could make entry impossible.And as you can see on the charts if trader chased entry and enter trade much above desired entry level, then he could experience much bigger loss after pullback stocks made. Patient trader waits and as you can see there could be probably possible to prepare new setup for long entry in CHK stock soon.
Return from Stock charts technical analysis back to Stock trading system
Return from Stock charts technical analysis
back to simple-stock-trading.com
|
