Sometimes, as traders, we overthink things.
Itโs one of the bigger failings of us as humans. Even when everything lines up the way we want it, we second-guess ourselves.
The reason this happens so often in trading is we want things to follow our logic.
If I see a pattern develop and it matches my trade plan, I consider entering the trade. The end.
But suppose a week later, I see the same signsโฆ on the same stock. My trade plan says to look for an entry point.
However, theย logicalย part of my brain says, โHey, you already took the gains on this trade. Move on!โ
If I had listened to that part of my brainโฆ I would have missed out on two more winning trades.
If youย jump into my trading journal, youโll see PROG pop up there a bunch of times. Three times inside of a month, actually.
This isnโt by accident.
PROG fit – andย continues to fitย – several fundamentals that Iโm looking for in a trade:
- Upcoming catalyst event in November
- The first two trades were trend reversals
- The third trade was a higher high, higher low pattern
- And of course, any time I am looking to enter the trade, the volume ticks back up again (look at all those gray bars!)
Letโs review how each of these trades did, on average (some shares were sold in stages):
- September 29th-30th: Bought at $1.069, sold at $1.262
- October 5th-11th: Bought at $1.279, sold at $1.455
- October 22nd-25th:ย Bought at $2.862, sold at $3.339
This goes to show you: Having a clear trade plan to follow is one of the most important steps to take if you want to be in trading.
Too many traders follow their whims and wind up making mistakes. If I thought about it too logically instead of listening to my trading plan, I probably wouldnโt have caught all of these trades.
And for the record, the catalyst event is still coming up in November – so PROG isย stillย on my watch list.
Will I trade it a 4th time before the catalyst event comes up?ย Keep an eye on my trade plansย and see what happens next!