"The following was taken from Internet. I don't claim credit for the same.
100% SUCCESS RATE
This trading plan will show you how to lock in profits in your winning trades 100% of the time
There are two questions that are asked many times by Wizetraders.
1. I am in a profit, the charts look great, what do I do to make sure that I lock in profits?.
2. I am in a profit, the charts are starting to look bad, when should I look to get out of this trade?.
My plan will work 100% of the time to Guarantee anyone that they will lock in profits, take emotions out of the trade and they will NEVER experience turning a winning trade into a losing trade. This plan will work for any trading style except super active (not enough time to do it), but it must be implemented exactly in the way it will be described.
Lets take an example of a trading situation that many of you have been in. You want to purchase 1000 shares of XYZ stock (the amount of shares does not matter). You do your homework and decide you want to trade this issue. Your trading plan for a profit goal is Rs400 and your maximum loss will be Rs200. That is a 2 to 1 reward to risk ratio. You decide to enter the stock only when it has the George Thompson look, i.e the long and mid term are strong and long. It has a fresh green day with strength on the 130, 150 or 180 (whichever light you use) and time your entry on a committed green 30 minute light with a fresh green 10 minute light.
You now enter the trade and in a short while are profitable and giving yourself a high five. You are now feeling really good about yourself as the stock approaches your profit target and you and your friends TRADING PLAN and COMMON SENSE are very happy. Just at that very moment someone knocks on your door and asks "what is all the commotion about". You tell him you are having a trading party. You can see that he is disappointed that you did not invite him. Not wanting to be rude you invite him in. You have met this person many times before but have never been formally introduced. He introduces himself and tells you his name is GREED. He tells you he has other friends that love to come to trading parties. TRADING PLAN comes into the room and sees that you are talking to GREED. TRADING PLAN goes nuts and starts to rant and rave. You ask TRADING PLAN "why are you getting all worked up?" and he says "do you know who that is". You say yes I do, he lives right next door and I have invited him to the trading party. TRADING PLAN tells you to uninvite GREED because GREED is bad!!!! COMMON SENSE comes into the room and agrees with TRADING PLAN. You look over towards GREED and he looks harmless to you. You tell your friends TRADING PLAN and COMMON SENSE to mind their own business and go back to see how your stock is doing. This is big mistake but at the time you do not realize it. GREED starts to ask you about TRADING PLAN and how long have you known him? GREED starts to talk to about money, money, money and how he has a plan that can make you even more more money than your friend TRADING PLAN can. GREEDS' smooth talking ways convince you that TRADING PLAN is not to be listened to. Just then, TRADING PLAN comes running into the room and says "we reached our profit goal of Rs400, lets sell like we agreed to do". You are just about to listen to him when GREED pulls you aside and whispers in your ear only Rs400 dollars, you can do better than that. You tell him, but TRADING PLAN and I have a plan in place and COMMON SENSE tells me that i should listen to TRADING PLAN". GREED replies change your plan, you can make more money, a lot more money if you listen to me, take your time, just wait a little bit longer and you can make even more money and then use your plan, but for now just get rid of TRADING PLAN and COMMON SENSE". You decide that it cant hurt to wait a little bit longer and so you do. TRADING PLAN is very upset that you are not sticking to the original plan. GREED whispers to you "why not send TRADING PLAN to the store to get some snacks and drinks for the party. COMMON SENSE does not want to leave your side but you tell him to go. He doesn't leave but TRADING PLAN reluctantly leaves and you do not even notice that he is long gone. GREED now calls you over to show you that his plan is working because your stock is now higher than before and look at the extra money you have made by listening to him and getting rid of that party pooper TRADING PLAN. COMMON SENSE realizes that you are in the clutches of the green -eyed monster GREED but there is nothing he can do about it. COMMON SENSE knows that he has to find TRADING PLAN and does'nt have a moment to lose. Soon after he leaves GREED tells you that you did the right thing and you both high five yourselves as your stock continues to climb up higher and higher. GREED gives you that little wink in the eye and says see, I told you so, keep listening to me baby and I will make you a LOT of MONEY.
You now begin to count your Paper Profits (remember all profits are paper until you sell and realize the actual profits). As you are counting your new found riches you look again to see how much more your stock has gone up and you now notice that your stock is starting to pull back. You call GREED over and ask him "what is going on, we just lost some of our profit". GREED tells you not to worry but he senses that he is about to lose you if COMMON SENSE finds TRADING PLAN so he invites one of his friends named RATIONALIZATION over to talk to you. RATIONALIZATION tells you not to worry and that everything will be okay. it will come back he says and you are comforted by RATIONALIZATION'S smooth talking ways so you continue to watch but your stock keeps on falling and now what was once a Rs400+++ profit has now been cut in half. You start looking frantically for TRADING PLAN and COMMON SENSE. GREED and RATIONALIZATION realize that they need reinforcements to keep you from listening to COMMON SENSE and follow TRADING PLAN so they call another friend of theirs whose name is HOPE.
HOPE comes over to your place and she is beautiful. She looks at you with her mesmerizing beautiful eyes and tells you in her sexy, sultry voice hey trader honey, listen, why dont we just look at this situation and see if we can come up with a solution, lets "HOPE" everything will work out okay. Against your better judgement, you decide to give HOPE some time to work in your favor. Time goes by and HOPE is not working and your profits continue to dwindle. You are now frantically trying to find TRADING PLAN, but alas, you sent him away. You call out for COMMON SENSE and at that moment COMMON SENSE and TRADING PLAN come bursting through the door. COMMON SENSE now starts to tell HOPE that she is wrong, GREED is wrong and RATIONALIZATION is wrong. In the meantime your Rs400+++ profit has now turned into a Rs200 loss. GREED, HOPE & RATIONALIZATION sense you are about to lose it so they call their friend PRAYER to come over in one last attempt to keep you listening to them.
PRAYER comes over to your place and in a calm, soothing voice tells everyone in the room to kneel beside him. GREED and RATIONALIZATION do not believe in PRAYER. HOPE kneels alongside you, along with PRAYER, TRADING PLAN and COMMON SENSE. You pray that you will be happy even if your stock comes back to breakeven and you promise PRAYER that if he makes your stock come back to breakeven you will sell and never listen to GREED, RATIONALIZATION or HOPE ever again. You close your eyes to say your "prayer" with PRAYER and when you open your eyes to check your stock you see that it has continued to keep falling. You look around the room and notice that GREED and RATIONALIZATION have quietly left the room while you were praying. Only HOPE is left but she tells you that she has to leave very soon because she has to visit many other traders who need HOPE as well. The only persons left in the room with you are TRADING PLAN, COMMON SENSE and PRAYER; and PRAYER is not working to well. You ask TRADING PLAN to forgive you and to please help you get out of this situation. TRADING PLAN tells you it is to late and the only person who can help you now is someone that TRADING PLAN calls when there is a trading emergency. TRADING PLAN makes the call and in a few minutes there is a knock on the door. You begrudgingly open the door and this is the person that no trader ever wants to see.
This person hands you his business card. His name is LOST PROFIT and if you need him he is available to listen. Reluctantly, you talk to yourself, swearing and mumbling while he quietly listens and you decide to sell to LOST PROFIT. Just as you are about to sell, HOPE sticks her pretty little head in the door to say something to you before she leaves. She tries one more time to talk you out of your decision saying "honey, there is always HOPE, believe in HOPE, HOPE is beautiful. You tell HOPE to "SHUT UP" and never come back. LOST PROFIT thanks you for making a wise trading decision and hands you a piece of paper. It is TRADING PLANS' plan and LOST PROFIT tells you this is a nice TRADING PLAN, you should listen to the person who gave you this. Was it COMMON SENSE? You want to strangle LOST PROFIT and kill him along with GREED, RATIONALIZATION and HOPE but you dont want to go away for 25 to life for being branded as a serial trading killer. Besides you cant do any trading if you are in an 8x8 cell with a cellmate named TINY who keeps looking at you and winking.
I have a trading plan that will Guarantee 100% that you will never lose your profit in a winning trade. You must follow this trading plan exactly.
Lets go back in time, before you were visited by our so called friends. You have reached your Rs400 profit target and you hear GREED knocking. Cover your ears and do the following:
You had 1000 shares of XYZ stock. You are in a Rs400 profit which was your target profit. Here is the plan. Sell half the position (500 shares) for a Rs200 realized profit and IMMEDIATELY put in a trailing stop for .20 on the rest of the 500 shares.
Here is the math formula for calculating the trailing stop. Whatever the profit amount is on portion you sell (in this case it was .40), divide that in half and use that amount as the trailing stop on the remaining shares(in this case half of .40 is .20, so you place a trailing stop of .20 on the remaining 500 shares)The worst case scenario would be that from the time you placed the trailing stop, if the stock dropped .20 you would make another Rs100 for a total profit of Rs300 overall.
The worst case scenario would be that from the time you placed the trailing stop, if the stock dropped .20 you would make another Rs100 for a total profit of Rs300 overall. Best case scenario would be the stock continues to go up and eventually the trailing stop will take you out of the trade locking in even more profits. You have completely taken the EMOTION out of the trade and you can now go on to other trades with a clear, happy and focused mindset.
