My trading strategy is for directing me to find the right stocks each day; to perform proper due diligence analysis; to look for the best potential stocks for trading which have relatively smaller risk and greater reward; to decide on the size of entry position so as to know my maximize potential risk; and to determine where I should enter and exit a stock in order to minimize my loss when my initial prediction of stock direction is wrong and to maximize my profit when my initial prediction of stock trend is right.
Take a look at my trading strategy below. You are welcome to comment on it or add your own thoughts.
Step 1. Fill out the stock watch list from market news subscription;
Step 2. Identify stocks that have trending setups;
Step 3. Determine if trending stocks have a support or resistance level;
Step 4. Analyze how big the risk and how big the rewards are;
Step 5. Calculate the reward / risk ratio. Determine if it is greater than 2;
Step 6. If reward / risk ratio is greater than 2, determine position sizing;
Step 7. Enter position with size determined in Step 6;
Step 8. Immediately set stop loss at determined risk level;
Step 9. Actively manage the position in the preliminary stage. Prevent stock from going against to the risk level;
Step 10. Once the stock becomes risk free, periodically move the stop loss to 10 exponential moving average (EMA) level;
Step 11. Get out half of the position when stock approaching to the targeted price;
Step 12. Exit all when stock reached targeted price.