How To Manage A Share Purchase

Think of trading as a business. Proper management of the business will ensure a successful enterprise. In the same way, proper management of the activities of trading is required to provide for trading profits.

If you buy a share for trading, what is your role in the trade ? After all, the market decides if the price will go up or down. You cannot control the movement of the price. What is the role of your skill in the trading business ?You can manage the trade properly, or mismanage it. Your role will play an important part in the success or failure of your business of trading.

You decide:

1. What is the trend of the stock ?
2. At what entry price is a purchase justified ?
3. Is there a valid stop loss near the entry price ? If not, should you take the trade ?
4. If the stock price falls a little but not enough to stop you out, will you evaluate the trade again after a period of time ?
5. If you are stopped out, will you consider a reentry ?
6. If the trade goes in your favor, at what point will you move the stop to brekeven ?
7. Will you buy more if the trade goes in your favor ?
8. If the trade is in profits, do you plan to sell a part of your position ? If so, what are the rules for exiting partial position ?
9. How will you keep trailing stops ?

These are some of the issues that are in your control. As a trader, you should plan and manage them. Notice that I have not discussed anything about the possible price movement. Why ? Because the market is not within your control. We can manage only what we can control.