Stocks Trading Strategies – Trade Management and Discipline

Many traders have their own personal strategy for managing  their trades once triggered and the saying “not always right but never wrong” holds true when discussing many of these stocks trading management strategies.  The theme that is critical to these differing stock trading strategies is discipline – A traders hardest task whilst managing his open trades is being disciplined and actually staying true to his/her trade stocks trading management strategy.

I personally have found this difficult in the past and it was one of the driving forces for me to start my transparent online trading diary and have now shared many of these journals on  www.mytradingbuddy/trading-diary .Keeping my Stocks Trading Journal kept me honest and focused on my strategies, whether entry, exit or trade management.  For any trader at any level a comprehensive trading diary is essential so that learning can take place initially to hone various strategies but ultimately to ensure a trader remains focused and disciplined.  I just took that one step further and put it out there, the good, bad and occasional ugly so that I had that extra level of subscribers/readers to ensure I stuck to my guns as it were.

Below I have given examples of two trades that were  open at the time of writing this article and plays through the stages that I went through in managing these trades since entry.

1.  CVX-NYSE Chevron Corporation on a DAILY Chart.  Stocks Trading Discipline & Trade Management 

I entered the trade on  06/06/14 as it met my criteria for a with trend wave 5 trade.  See the chart below for the entry point (green hatched line) and the corresponding Stop Loss (red hatched line).  Please also note the initial target zone (horizontal blue & pink think line)

stocks trading

My next critical point in the trade is half way to the original target zone.  Typically most Wave 5 movements take, on average, 20 bars to complete the move and so I look for a strong trade to reach to 50% to target line by at least the 13th bar.  If the trade is going sideways and is no where near the 50% line then I would look to consider putting on a Trailing Time Stop or in fact closing the trade.  This will depend on the margin I have available and how many other trades I have open at that time.  In the case of CVX this has not been an issue as it crossed and closed above the 50% to target line after only 6 bars (days).  At this point my immediate action is to move the Stop Loss to just above the entry point (Break Even Point) and make this a “Risk Free Trade”.  The chart shows this below.

stocks trading

From this point my Stop Loss becomes my Trailing Stop and how this is moved is dependent on many factors that I do cover in my mentoring program and are too varied for this post. For this particular trade the momentum has been strong, which in part has been affected by the Iraq issues and the rise in Oil prices.  My aim in every trade is to protect as much profit as I can whilst ensuring the trade has enough space to work.  In this case only the day after I moved my Stop Loss to my “Risk Free Trade” status, the price hit my original price target and closed the session strong.  I moved my Trailing Stop to 125.33 which was just below the low of 3 bars (days) back locking in 0.75% profit on my trading account balance and allowing for a potential slight pull back from the target zone as in a great deal of instances this acts as resistance.  See the chart below for confirmation of this move.

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Paul Bratby
Paul is an ex British Soldier who served 17 years an Engineering Manager in the British Army. Since leaving the Army he has held high level positions in Companies around the globe with the most recent running the Liberia (West Africa) Country Operations for a Gold Exploration and Mining Company. In 2014 he launched www.mytradingbuddy.com which continues to grow massively as a free resource to all traders.
He has been trading his own pension and savings accounts full time and has written an electronic trading journal which he will publishing as a book in the near future.
Paul Bratby

Paul Bratby

Paul is an ex British Soldier who served 17 years an Engineering Manager in the British Army. Since leaving the Army he has held high level positions in Companies around the globe with the most recent running the Liberia (West Africa) Country Operations for a Gold Exploration and Mining Company. In 2014 he launched www.mytradingbuddy.com which continues to grow massively as a free resource to all traders. He has been trading his own pension and savings accounts full time and has written an electronic trading journal which he will publishing as a book in the near future.

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