Take Time For Building A Winning Trading Plan


Simpler Trading Team

Apr 13th 2022  .  4 min read

We all know that one person in our difficult high school or college classes who bragged about acing tests without studying.

Over the long-term those who prepare for tests are better off for their efforts. This applies to trading where research – studying the market and preparing for twists and turns – can lead to more successful trading.

Time is a valuable asset for traders. All levels of traders must include scheduling and controlling time as a resource – building a winning trading plan.

(Check out the free video, above, for insight into trading this changing market.)

Start early to build a winning trading plan

Acing tests in a wild market with no preparation doesn’t happen in trading. 

The team at Simpler Trading will tell anyone that their strategies often begin the previous day or night before they even consider a setup.

This includes a checklist and trading plan reviewing the most bullish and bearish stock opportunities available the next day. Short-term traders, or day traders, aren’t necessarily charting their trades for long periods of time, so a day-to-day review works.

Following each market session, Simpler’s traders step back to collect the information needed to assess the “big picture” of the market and apply a trading strategy. This involves looking at tickers that reflect the overall state of the broader market. These might include various stocks, sectors, or indexes.

Is the broader market going up? If so, Simpler’s traders know that stocks tend to go up as well. Is the broader market dropping on the charts? Likewise, stocks tend to move in a downward fashion.

An assessment of the broader market lets traders determine the indicators and trading strategy to make the most of their valuable time.

For example, an indication that a daily squeeze is setting up or perhaps the market is beginning to look bearish – these impact possible setups and strategies for new ones.

Find more reasons to take a trade

It’s important to look for multiple reasons to take trades. A single indicator or signal shouldn’t be the only factor to pursue a possible move.

As Simpler’s traders establish the market environment to target, they mark key levels and establish zones by looking at an intraday chart.

For example, traders who are working in a bearish environment might see how far they can short trades when setups hit key levels.

To short the market, entering at a key level allows traders to manage the short from that position to plan the exit. This takes patience and planning ahead by looking at the big picture first.

(Check out the video, above, for insight into overcoming trading losses.)

Traders looking for trades to the upside will need to build a plan that reflects the key levels in both directions. This lets traders know that a hold can become a bounce, but if it gets short it can be played differently.

Options traders can build a watchlist that lets them run through the options chain for stocks they want to trade.

This watchlist should include both calls and puts as well as a non-biased scenario up or down. Then, traders are reading and reacting to the market with their trades based on their watchlists – not emotion – and are protecting their time.

Daily trade preparation is valuable

Daily trade preparation protects traders’ time – a valuable asset.

Traders who build better plans on a day-to-day basis by looking at the bigger picture have a gauge for the direction the broader market is moving.

Since news and announcements can influence market direction to change on a dime, paying attention to the media and the economic calendar can be a useful tool in trading plans and strategies.

As traders repeat these processes, the goal is to gain confidence in preparation skills. The routine of preparation for building a winning trading plan becomes second nature – like studying to ace that test.