Plan > Prepare > Proceed
A Note About Process -- And A Breif Market Update
The Successful Trading Process
Successful and consistently profitable trading requires a repeatable process. Many successful processes avoid complexity.
Here is a simple formula to consider.
Plan > Prepare > Proceed = Success
Plan:
Survey conditions and look for opportunities. For me, that means;
Charts > Chats > Checking In
Charts:
First, the overall market:
Is the market trending up or down, or is it flat?
Is it volatile and noisy? Or calm and steady?
This is part of the assessment in each Market Update article written and published here, as well as the Weekly Chart thread I post each Saturday morning on X.
Identifying the market trend and type helps answer the questions:
Is it time to be active or time to wait?
Should we be more aggressive by taking larger position sizes?
Or is it a “fewer positions with smaller size” environment?
After analyzing the broad market charts and identifying the market type, it is time to consider specific trade ideas.
Which stocks or ETFs have actionable setups?
Do they offer a suitable reward to risk relationship?
Do they align well with the overall market trend?
Chats:
What are my friends and fellow traders saying and doing?
Trading doesn’t have to be a solitary endeavor. The T3 Live Inner Circle Virtual Trading Floor is an excellent resource for idea sharing and education.
And for all of its faults, X.com is also a fantastic place to build a network of world-renowned professionals who generously share their experience, knowledge, and wisdom.
Checking In:
Not only should you check in with peers, mentors, and fellow traders, but it’s also very important to check in with yourself.
Are you in the proper state of mind to execute the plans swiftly and accurately?
Are you confident in your market assessment and trade plans?
Do you feel relaxed and well-prepared?
After learning the basics (market mechanics, analysis, money management, order execution, etc.), trading is primarily a psychological endeavor.
It’s you against yourself.
Can you perform under pressure?
Can you stick to the plan?
Prepare:
Now, it’s time to craft the game plan by writing down algorithmic statements.
If A happens, then I will execute B.
Visualize trade before it happens. Know the setup and identify the trigger. What exactly will it take for you to get involved?
Maybe it’s a breakout, maybe it’s a pullback to a support level, or maybe it means waiting for earnings results or a certain news event.
Be specific. The less ambiguity, the better.
Finally, know your risk levels and arrange for proper position sizing.
Where will you take profit as the trade works in your favor?
Where will you cut it loose and take the pre-planned loss if it goes against you?
How big of a position will you take?
Is this an A+ trade? If so, that should mean bigger size.
Is this a ‘starter’ position? That likely means smaller size with room to add more later.
Whatever the situation, make sure you know how many shares or options contracts to start with and how many to sell at the pre-planned intervals.
Proceed:
Now, simply wait for the triggers, execute the trades, and manage the positions according to the plan.
Take profits (or partial profits) at the pre-planned levels.
Set stop orders (or alerts if using a ‘mental stop’) for new positions.
Protect gains by managing those stops as positions move in your favor (trim and trail.)
Success!
We can not know the outcome of any single trade in advance. And one trade does not mean success or failure.
We can follow the process and adjust along the way.
Rather than get hung up on any single result, look at a string of trades together.
How are the last 30 trades?
The last 100?
If the process (trading system) is profitable, is it reaching its full potential?
If unprofitable, is it because of poor planning, poor setups, or mistakes?
Identify the problems and adjust as necessary.
Note: This seemingly simple statement can often be the most challenging part. Self-assessment isn’t always easy—more on that in a later article.
Now follow the process, journal the results, and have repeated reviews to modify and improve as needed.
That is success.
The Markets
The market is mainly in a holding pattern ahead of NVDA earnings tomorrow evening.
SPY made a pivot high on Monday and then tested that level again twice today.
— 30-minute chart with the WTD AVWAP 🟣 and 5-day MA🟠 shown.
The Charts
SPY is steady above all the key moving averages.
QQQ has a little more range but is doing the same.
IWM has let the 8-day MA catch up to the ~$207 pivot.
DIA is doing more of the same.
TLT is still holding where it needs to. Can it move beyond the 200-day MA and YTD AVWAP in the near future?
DXY could be forming a bear flag between the 50 and 200-day MAs.
BTCUSD is resilient, moving up and through levels one step at a time.
The Trade
In the words of the late great Jon Boorman,
“Buy uptrends and manage risk.”
That’s the trade.
It is for me, at least.
As always, do what suits you. If you’re still figuring out what that is, the simple process above may help.
I’d love to read what you think. Let me know in the comments.
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The Disclosures
***This is NOT financial advice. This is NOT a recommendation to buy, sell, or trade any security. The content presented here is intended for educational purposes only.
Andrew Moss is an associated member of T3 Trading Group, LLC (“T3TG”), an SEC-registered broker/dealer and member of FINRA/SIPC. All trades placed by Mr. Moss are done through T3TG.
Statements in this article represent that person’s opinions only and do not necessarily reflect those of T3TG or any other person associated with T3TG.
Mr. Moss may hold an investment position (or may be contemplating holding an investment position) that is inconsistent with the information provided or the opinion being expressed. This may reflect the financial or other circumstances of the individual, or it may reflect some other consideration. Readers of this article should consider this when evaluating the information provided or the opinions being expressed.
All investments are subject to the risk of loss, which you should consider in making any investment decisions. Readers of this article should consult with their financial advisors, attorneys, accountants, or other qualified investors before making any investment decision.
POSITION DISCLOSURE
May 21, 2024, 4:00 PM
Long: ENVX0621C10, HOOD0621C20, IMNM, IWM, LLY, PANW, PANW0621C325, SNAP, SNAP0621C17, VKTX0621C85
Short: n/a
Options symbols are denoted as follows:
Ticker, Date, Call/Put, Strike Price
Example: VXX1218C30 = VXX 12/18 Call with a $30 strike