Rules of the Trade

1. Our entry prices provide you with the best opportunity for succeeding. Entry prices attempt to minimize losses as much as possible (in the event that the position goes against you). With any trading system, you have to adhere to the stop-losses. If not, you are putting your capital at risk, and as we all know capital preservation is the most important key to successful trading.

2. Shareplanner adheres to the rule that you should never lose more than 2% of your capital on a single trade. That doesn’t mean you can’t trade more than 2% of your capital, just that your loss should not be more than 2% of the total equity in your account (for example, if you have a $100,000 account and you want to place $10,000 on a single trade, then you should not expose yourself to no more than a $2,000 loss – which is a 20% loss on that trade but only a 2% loss to the value of your account).

3.  Stage your positions; don’t allocate all your cash too quickly. Instead initiate your trades and add to them over time as the position increases in values. This helps you to not be impacted all at once by wild market movements. However, do not average down a position – by doing this you just expose yourself to more risk on a position that is already going against you. Remember – “Losers average Losers”.

4. Once a target price is hit we will close out half or all of our position in that holding and recommend you doing the same. However, depending on market dynamics and that of the stock itself, we may raise or lower the target price based on the aforementioned. It is important that you check nightly in the Shareplanner Portfolio for changes. As a rule of thumb, and unless otherwise noted, take profits at target prices.

5. As a position increases in value we will raise our stop-losses accordingly. Stop-losses are made to be followed rigorously. We cannot stress this enough. It is important that you check nightly at Shareplanner Portfolio for changes and not let your profits turn into losses.

6. On that same note – ignoring a stop-loss, hoping to break even is hopeless. In a sense it’s like asking the market for forgiveness by letting you break even; the only thing is, the market is unforgiving. Cut your losses before they get worse.

7. The Risk Rating provides you with a subjective view of the perceived inherent risk of a posted stock. You should be familiar with your tolerance for risk and trade accordingly.

8. Never make a trade into an investment. The best way to lose money in this game is to confuse the two.

9. Our rules for trading “Short” should be reversed. We believe it is important as traders to learn to trade short as easily as you trade long – it will add an entire new dimension to your trading plan. By the way if you are worried about incurring an ‘infinite’ loss, to date no has yet done so…

10. Finally: Plan the Trade and Trade the Plan