Missing Trades can be incredibly frustrating. We put in the work, the analysis, create a plan… And then for one of a dozen reasons we end up missing the trade. This is something that used to happen to me all the time. It was infuriating! …Not only because of a bruised ego, but because I’d begin to think of all the things I could have been doing with my time.
How to Stop Missing Trades
In this post, I want to give you a few tactics about how to stop missing trades. These are the tactics that I use presently and have helped me a great deal. Don’t get me wrong, I still miss trades. We can’t catch them all. Part of clarity, focus, and trading in the present is having an understanding that there are literally millions of opportunities in the market. We couldn’t possibly trade them all even if we wanted to.
1. Build and Maintain Watch Lists
One of the lists I enjoy building, actively maintaining, and reviewing once a week is a “Universe List”. This is a catchall list that houses every stock that I’m interested in for one reason or another. Maintaining and reviewing this list consistently every week keeps me in tune with what each of the stocks are doing. There are typically about 100 stocks on it at any given time. It only takes a few minutes to scroll through each of the charts. I find that it is well worth the effort to keep a pulse on what I feel are the most interesting ideas.
I’ll also keep separate lists for where the ideas came from. For example, I’ll keep lists of what passes our ChartYourTrade MRI scanner by 80% or more on a separate list because these stocks have shown to have a greater probability of producing a significant run after having passed the scan. Check out the 2016 case study here (2017 case study will be coming soon).
2. Pick a time frame and trade within that time frame
One of the things that used to trip me up would be to try to trade multiple time frames and multiple strategies all at the same time, all within one account. I thought I was optimizing my trades. Instead the only thing I ended up optimizing was how to lose in a hurry!
Now my accounts separated by time frame and I stick to one set of rules per account. I have separate accounts for short-term swing trades, intermediate-term trades, and long-term investing for things that will be held for longer than a year. Prior to entering any trade I’ve noticed that it is important to clearly state our intention for the trade. It’s something that has helped keep me focused as the trade progresses.
3. Develop Plans, Systems, and Processes for Consistent Review
If we’re inconsistent with our work, it becomes dramatically less meaningful and it will be far more difficult to make progress. This is another lesson I’ve learned the hard way. What I’ve learned to do is figure out what I’m capable of given my circumstances and ambitions. Then I’ll look at the worst case scenario. For example, if things begin to get insanely busy at the day job for an extended period, or if something significant happens with my family and my schedule is thrown off, how can I still successfully manage my trading?
I’ll think through these worst case scenarios and figure out the critical path for my trading. What’s most important, what must get done, and how long will it take. I then look at my calendar and find blocks of time where I can consistently do the elements on my critical path.
For me, the weekly critical path includes Identifying Market Health, Understanding what stocks and groups of stocks are leading the market, Identifying trades, Making plans for those trades, and reviewing my existing trades. This may sound like a lot but it typically only takes me about 30 minutes in total over the weekend.
Check out the video above for greater depth. Be sure to leave a comment below with any thoughts or questions you have.