Prepare For the Next Trading Session

Each day, at the close of the trading session, I write down an action plan for what I plan to do the next day. My action plan is based on empirical judgments I make about the most recent candlestick stock charts.

First, I scan through my list of filtered stocks and look for potential buys or stocks I can put on my watch list. After I’ve filtered my filtered stock list, I look at each particular stock technically. Then, I predetermine my actions for the next day.

Under what circumstances will I enter stock ABC? If it hits a certain level I tell myself that I will enter at this point or if it reaches overbought I won’t touch the stock. If I do enter a trade, I determine, prior to when I execute the trade, where I will put my stop. In short, I write down all the major variations of what could happen to stock ABC the next day. Then I write down how I will react if X happens or Y happens.

Incidentally, AIXG was one of my most profitable trades this year. I traded it in and out for 50% gains.

Judging by the above chart there was resistance at around $9.75, which has since turned into some kind of support. This means that the stock has developed a “foundation” and the price of the stock is holding above that support price. At around July you can see that the stock had trouble getting over the $9.75 price. Keep in mind, support and resistance lines are only there until they are not. These lines don’t mean that the stock will never fall below this line or break through it; it simply means that something is holding the stock at above or below a certain point for X amount of time.

Judging by this chart, I would determine what I would do if:

1) The stock falls below 9.75 during the day- I would then not enter this stock because to me it would have broken the 9.75 support

2) The stock goes up the next day – I would probably enter because my stop would be at the support line. The risk would be around 50 cents or so depending on where I buy the stock at.

There are variations as to what you can do based on what happens the next day. I prepare myself for general situations (if it goes up or down) then I act according to what I’ve written down.

This way I am not emotionally clouded by price fluctuations when the market opens the next day. I can keep a clear mind and just trust my strategy.