Trading Lessons I Learned the Hard Way, Part 8

08/10/2012 10:00 am EST

Focus: STRATEGIES

Ron Wagner

Principal Partner, RevolutionaryTrading.com

Ron Wagner of Revolutionary Trading discusses the lessons he learned from his early days of trading and how his trading has evolved to become profitable.

Find the previous article here. Start at the beginning here.

Now that we have a lot of stocks in my universe, I want to work with as many as possible. However, too many friends and I may not be able to give all of them enough attention.

I learned early on that first, I needed to have friends in my universe. Then I needed to see which ones were going to be the friendliest to me. But I also needed to make sure I was not trying to track too many, or I may end up losing track of all of them.

At first I felt I was a hero! Look at my huge watch list. Look at how many good candidates I found to potentially trade. Then, when I made my watch list, it took me so much time to review them that I often missed moves on them all.

I learned to become more selective. Even if I had a large number of candidates to watch, I would make an “A” list and a “B” list. Not only did I have an “A” list, but I also had exact entries, targets, and stops established for each one. In other words, I had a plan to work with each candidate, should things line up properly.

I promised to tell you that one thing that really helped improve my results, and that was it. The smaller my focus list, the more money I usually made. Some days I only had one or two friends to hang out with, and often those were my largest winning days.

As I’m typing this, I think there just might be a personal perspective on friendships somewhere in this that we could all use in our lives. It never hurts to have a lot of friends, but make sure you give them the attention they deserve at certain times.

A great question is: How do I know which candidates might be the most productive? It’s not an easy answer, and I will tell you more about this in the next edition. In other words, we have our universe; we have scanned for best selections, found our best candidates, made a watch list and now what?

I learned the hard way not to think I could make my candidates perform the way I had anticipated, but rather accepting that the outcome would be dictated by the market. I will discuss more about this, next time.

Lessons learned:

  • Choose your candidates wisely!
  • Give your candidates the attention they deserve!
  • Create an “A” list and “B” list of trading candidates!
  • Have a plan on how you intend on trading each candidate before you enter a trade!
  • Don’t think the larger your watch list, the more money you will make!

We have come a long way together over the past many editions, and I hope you are enjoying the journey. Next issue, I will talk about another element that really made a difference in my trading.

Ron Wagner can be found at Revolutionary Trading.

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