The Plan

When I first looked at the stock market I decided I would need some good books to go through and a lot of people I talk to recommended me a couple of books. So I picked up the following books and have read them cover to cover:

Van Tharpe - Trade Your Way To Financial Freedom
Nick Radge – Adaptive Analysis for Australian Market
Mark Douglas - The Disciplined Trader
Mark Douglas – Trading in the Zone
Pristine - Swing Trading With Oliver Velez
Alexander elder – Trading for a living

I subscribe to a few blogs, but the first blog I read was Trade4cash by Brian, and I must say he has years of experience and knowledge of the market, but above all he genuinely tries to help you.

Now I have done a spreadsheet in excel which gives me fixed fraction position sizing for my trade. I have divided my trading capital into 6 equal lots so I can only put 1 lot on one stock. My stop loss is 5 %. Now with each lot I make an initial entry with 20% of the amount of the lot. If the position moves in my favor, I pyramid in with 60% of the lot and if the stock really is running then I top it off with another 20%.

I also try to find a good Return to Risk ratio (R/R) of atleast 2:1 to make an entry.

I had been paper trading for three months before I finally decided to jump in and what a difference it is. The emotions, the rush, fear, greed, all at the same time is to impossible to feel if you are paper trading.

In the next few posts I will discuss some of stocks I have taken a position in and the rationale behind them.