A lot of email has come in from readers asking me how to improve upon
"pulling the trigger" to enter a trade. How many traders out there have
ever pondered a potential trade for so long that once they actually got
ready to execute it, they then got cold feet due to concern they had
missed the move?
Some traders are reluctant to put on a position because they are torn
between what they perceive as conflicting market factors. Here's a
typical quote from such a trader: "The moving averages are positive, the
market is trending higher, but the RSI shows the market as being way
overbought. What should I do?"
A "Trading Checklist" of prioritized criteria not only will help you
decide when to execute a trade, but will also help you identify
potential winning trades. You'd be surprised how a visual checklist can
resolve uncertainty in your mind.
What kind of stuff should a trader put on a Trading Checklist? That
depends on the individual trader. Each trader should have his or her own
set of criteria that helps determine a market to trade and the
direction to trade it--including when to get in.
(As an aside, I like to compare my trading criteria to a bunch of
tools in a toolbox. The more tools I have at my disposal, the better.
Also, there are different tools for different tasks. However, there are
some basic tools that I think are more important than the others and
that are a must for the toolbox.
In trading terms, the more you know about chart patterns, technical
indicators, fundamental factors, etc., the more tools you will have in
your "trading toolbox" and at your disposal when trading the markets.)
Back to the checklist: You'll want to put your most important trading tools on the checklist, and in order of importance.
At the top of my Trading Checklist is: "Are daily, weekly and monthly
bar charts in agreement?" A very important position- trading tenet for
me is that shorter-term and longer-term charts must agree on the trend
of the market. If the daily and weekly charts are bullish, but the
monthly is bearish, there's a good chance I'll pass on the trading
opportunity.
So if my very first (and most important) objective on my Trading
Checklist is not met, then I really don't need to go any farther down
the list. I'll look for another trading opportunity.
However, if the last item (least important) on your Trading Checklist
does not meet your objective, but the big majority of the other
objectives on your list are met, then you may make the trade anyway.
It's entirely possible that all of your trading tools on the list may
not give you the proper signal to trade the market, but it's still a
good trading opportunity.
Every trader should have at least a few trading "tools" that help
determine a trading opportunity. Listing those tools on paper, in order
of importance, and then examining that list when deciding each trade
should make easier the sometimes difficult task of "pulling the
trigger."
Sumber:
Jim Wyckoff
