3 Secrets to Successful Stock Trading

Do you want to make money as a part-time stock trader? This article gives you the top 3 tools to get there.

Precision, discipline, and a systematic approach are key to success. This blog post delves into a well-planned trade with the stock COR. It shows how analytical rigor and strategic foresight can drive profits.

Join me to explore this trade from start to finish. We’ll cover the decision-making, execution, and reflection, targeting traders who appreciate a calculated approach.

SECRET #1: ENTRY AND EXIT POINTS

Setting the Stage for Strategic Entry

On November 7, 2023, COR caught my eye as the perfect stock for a calculated trade. Priced at $196.93, it was right in the buy zone, signaling an ideal time to buy. The market’s uptrend confirmed my timing, perfectly aligning with my entry criteria.

I set a stop loss at $187.76 and aimed for a profit target of $221.00. These specific markers defined my strategy, clarifying the risks and potential rewards. By setting these parameters, I ensured a disciplined approach to managing the trade. What’s the key takeaway here? It’s all about precision.

SECRET #2: CALCULATED POSITION SIZING

Deciding how much of your portfolio to invest in a single trade is crucial. For this trade, I allocated 8.90% of my portfolio, a figure that balanced risk with potential return. This wasn’t just a shot in the dark; it was a decision grounded in thorough risk analysis.

Effective risk management helps keep your portfolio healthy and your mind at ease. How does this strategy protect against market volatility? By ensuring that each trade is only a fraction of your total investments, reducing potential financial pain. Is this always foolproof? Let’s find out.

SECRET #3: SYSTEMATIC TRADING

Discipline and Precision in Execution

Entering the trade when COR was slightly above its pivot price may seem risky to some. However, my decision was supported by a systematic review of the stock’s accumulation patterns and overall market strength. This informed choice highlighted the importance of adaptability within a disciplined framework.

Systematic trading involves sticking to a plan that is tested and proven under various market conditions. This strategy ensures that each decision is not based on impulse but backed by data and analysis. Does this mean success is guaranteed? Not always, but it dramatically increases your chances. What can we do to further enhance our trading strategy? More on that soon.

 Successes and Lessons

Closing the trade on January 17, 2024, at the set profit target of $221.00 underscored the effectiveness of setting clear, objective exit criteria. The 11.15% return on investment from this single trade significantly contributed to my portfolio, highlighting the value of targeted, strategic trades. The overall trade execution not only reinforced my belief in the importance of strict trading rules but also proved the significance of aligning individual trades with the overall market direction.

trade details at a glance

opening

• Underlying: COR
• Date Opened: 7 Nov 2023
• Underlying Price at Opening: 196.93
• Stop Loss: 187.76
• Profit Target: 221.00
• Market Outlook at Opening: Confirmed uptrend
• RS Rating at Opening: 91
• Position Risk (%): 4.63
• Position Risk to NL (%): 0.41
• Potential Profit for Position (%): 12.16
• Risk to Reward Ratio: 0.38
• Position Size (%): 8.90
• Reasons for Opening the Trade:
  • The price was in the buy zone.
  • The market is in a confirmed uptrend.

closing

• Date Closed: 17 Jan 2024
• Closing Price: 221.00
• Market Outlook at Closing: Confirmed uptrend
• RS Rating at Closing: 88
• RS Change: -3
• Closing Remarks:
  • Trade closed by LMT order at the profit target.
• What Went Well:
  • Closed the deal as planned, maintaining discipline.
  • Sold on strength while the price was advancing rapidly and got extended.
  • Sold when the RS line had started to decline indicating that the leadership wasn’t that high anymore.
  • Bought the stock after it broke out of a solid base that was not deep or volatile.
  • Bought while the stock was under accumulation.
• Areas for Improvement:
  • Should have set the sell order higher, aiming for a CAN SLIM profit target of 20-25%.
  • The purchase should have been made a few days earlier at the correct pivot price.
• Lessons Learned:
  • Following strict trading rules and CAN SLIM principles helps maintain profitable trades.
  • Emphasizes the importance of the overall market direction being upward.
• Position ROI (%): 11.15
• Position ROI (Portfolio, %): 0.99
• Position Open Time (Trading Days): 47
• Position Open Time (Days): 71

Concluding Thoughts