Plan your Trade & Trade your Plan

Plan your Trade and Trade your Plan – BOSCHLTD FEB FUT Contract made this statement true!

Recently I wrote an article in the Chart Review section of my website. There I mentioned the 3 most important aspects of trading and investing. If I repeat, those were Risk, Reward and Probability i.e. RRP. I also did mention that why those aspects are significant in planning your trade. If you had gone through the detailed write-up, you would’ve come to know the difference between winning trade and losing one.

There is a thin line between your success and failure. You need to identify the factors that may impact your performance on screen. I mean you need to have an edge, another important aspect in trading. Because there are too many traders and investors who are looking to be successful just like you. There is someone on the opposite side of your trade who wants to take your money. You must know before making a trading decision that who is seating on the other side of a trade, a Novice or a Professional. After all, trading is a transfer of accounts from the person who doesn’t have an edge to the one who has.

So, how can you come to know that whether he is Novice or Professional? This is something you need to pay attention to. You can easily find them on a price chart. Novice trader qualities include irrational behavior, feels panic while pushing Buy/Sell button, impatient, unable to handle emotions, and most importantly he buys after a period of buying and vice versa. Did you get that? And once you find such type of trader, you must act the opposite of him and quickly too. Because if you miss this Novice, you would miss the trade.

The example (BOSCHLTD FEB FUT Contract) given in Chart Review section depicts this act. This was a nice setup trade in terms of the Risk to Reward ratio. We found the novice traders out there on a price chart and bought the contract when it was presented to us by them. A stop-loss was set and we waited for our Target. Though we achieved our Target the next day, we were confident that a much bigger ratio could be achieved in this trade. We waited for 2 more trading sessions for the price to move higher as the bigger picture Supply was spotted by us. Our trading set-up and patience had paid up and we reached the bigger target within 2 more trading sessions.

Below is the Chart.
Target achieved by following trading plan

See, as URL of this article stated, if you plan your trade and trade your plan precisely and professionally, you could achieve the financial reward much sooner than expected. I have forecast a much prominent financial reward for me on this wonderful trading / investing journey, now it’s up to you to decide on which side of the trade you want to stand. Novice or Professional?

Indusind Bank Feb Futures contract achieved the Target

The BUY call given on INDUSIND BANK FEB Futures to Buy @1225 with Stop Loss @1190 has achieved its Target @1330. Below the BUY and SELL chart.

BUY call on 1st Feb

Target achieved on 6th Feb

So you might be wondering how could this trade happened looking at the financial health of the bank.

Let me analyze the situation for you. Remember, the Price is the main indicator we look for when we push the button. Here the Demand/Support price for the bank was in the range of 1250-1191. We had set up the SL @1190 and this is important, always keep in mind. The Target we set was at 1330 which can easily be spotted on the chart.

When the price came to our pre-determined Buy level, we push the button without any hesitation. When we bought, the situation in the market was bearish. I mean the Bank Nifty was crashing over 1000 points, All key indices trading in red, Coronavirus weighing on the broader market. But we remained calm as we already have our Entry & Exit points in our trading plan.

The patience paid out and the price zoomed up from our entry and we’ve achieved our target price of 1330 within 5 trading sessions. We just followed our simple trading plan and kept patience while in the position.

The trading rule which has been applied here can be mirrored in any market, be it currency, commodity or interest rate futures. Following your plan is key. I am enjoying my profits, are YOU?