Trading is a game of precision, and today's recap is a testament to the importance of executing trades with a clear plan. As I navigated the market, I focused on the levels that were set before the market opened. These levels, especially the blue and gray ones, are not just arbitrary lines on a chart; they are carefully chosen based on historical data and current market conditions.
One of the key lessons from today's trading session is the significance of understanding and respecting these levels. When a stock approaches a pre-determined level, it's crucial to observe how it reacts. This reaction can provide valuable insights into the stock's future movement. For instance, when a stock tests a resistance level and fails to break through, it often signals a potential shorting opportunity. Conversely, if it breaks through, it might indicate a continuation of the trend.
Another critical aspect of today's trades was the concept of sizing. Entering a trade with a full position right away can be risky. Instead, I prefer to start with a half-size position and add more as the trade progresses and confirms my initial thesis. This approach not only minimizes risk but also allows for greater flexibility in managing the trade.
In conclusion, today's trading session reinforced the importance of having a well-defined plan and sticking to it. By understanding the levels, respecting the rules of price action, and managing trade size effectively, one can navigate the market with confidence and precision. Remember, trading is not just about making money; it's about making informed decisions based on a solid understanding of the market dynamics.
Thanks Pat