You have heard me say in the past how important it is to have a trading plan. To write it down and then to stick to it.

Well I have paid the penalty for not following it and getting impatient. Here is the scenario of what has happened.

On November 3rd I bought $2,000 MEO AT 42 cps (cents per share).They went up to 48 cps and then went up and down for a few days, basically going sideways. They ended up at 46 cps and here is where I stuffed up.

Firstly I had forgot to put a stop loss in at around 40 cps which ensured I would not lose more than 10%.if they did go backwards. If I had had that in place I need not have worried. I just forgot. (call it a senior’s moment)

Secondly, I feared they might go down more so I sold at 46cps which meant I made a profit of 6% or $126.00 after brokerage.

Well at least you made a profit you say. Maybe so, but if I had stuck to my plan for the very next day after I had sold them, they went up to 52 cps which meant I would have made a profit of 20% or $414.00. A very big difference.

The end result of losing nearly $300.00 has caused me to make sure that my trading plan is in a prominent position where I can see it (I stuck it in a picture frame next to the monitor)

For those who are interested here is my “trading plan’, in a nutshell:-

1.Do your homework/research.

2.Know the amount you are investing in the stock.No more than 10% of your portfolio’s value.

3.Work out your profit margin. So you know how much you are going to make plus know your exit price. (The price you are selling at.)

4.Put your stop loss on so you will not lose more than 10% ( $2,000 = $200 this includes brokerage).

5.Don’t get greedy,panic or fearful. (You can’t afford these emotions in trading.)

6.Have an up to date list of around 15 to 20 future prospects ready at all times.(If in doubt leave it out) and keep them up to date.

7.Dont get impatient, Don’t go chasing share prices/ stocks. And make sure you are using “real time data” 20 minutes delayed price is for the birds.

Incidentally the new stock I purchased is MLS (Metals Australia) who specialise in mining zinc. I bought $2,000 worth at 3.9cps this morning and at close of day the price had gone up to 4.2 cps a nice increase of 7.9% for one day’s trading. Plus they had a good news announcement today ,so that’s a bonus.

Yes! my stop loss is in place and I anticipate at selling at .5 cps which is 25% profit or around a nice sum of $498.00 after brokerage

And yes I will definitely be sticking to my trading plan like s##t to a blanket. I have learnt my lesson.

I just wonder where I will stuff up next time??

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