Trading Strategy: Think in Terms of Probabilities and Predefined Exits
A strategy with predefined exits levels helps you completely eliminate psycho-traps, as long as you stick to them.
Either one share reaches your +20% target or it is stopped at -10%. There are only (!) These two alternatives for you and you stick to it until one of the two events occurs.
Other investors, however, are always at a loss and ask themselves at news or price movements regularly what to do now.
With a fixed system with fixed exit prices, this is a thing of the past for you.
Because your exit courses are fixed from scratch, you do not need to track news or business reports. Afterwards, you can sit back and watch as your portfolio continues to appreciate.
How to jump from one profit wave to the next
But: Keeping strictly to the guidelines is often easier said than done, especially for beginners.
Why sell a stock at -10% if it could recover? And why should you get off at + 20% profit, if maybe there was more in it?
Quite simply: Because you and I do not rely on “hopes”, but on a proven, highly profitable trading system. And believe me: there will never be a shortage of +20% opportunities in good stock market phases!
The chart break after a correction always means a starting advantage for you, which you should take as often as possible.
Instead of overstating the price increase of an already well-stocked stock, you take + 20% profit and put your bet on a new top stock with a fresh tailwind.
And another profit tip: You automatically secure part of the previously realized profits by stopping!
It depends on the optimal entry time
And that is why I am only after the convincing overcoming of chart resistance in shares. Because this is exactly the point at which large market participants (unintentionally) show their colors.
Does the stock behave on these chart brands as it is common for strong winning stocks?
In this case, big buyers such as funds are still picking up quickly, fearing that they might now “run away” the winning stock.
The chances for further price gains are high. These are the stocks that I want in my portfolio.
If, on the other hand, there is only a brief “twitch” over the resistance, the willingness to pay is outweighed by large sellers who obviously do not trust the stock much anymore.
Accordingly, the chances of winning are lower.
Get the chance on your side
I give you some valuable advice: Always think of the stock market as a probability in the first place.
After all, you do not want to collect falling loser stocks in the portfolio, but you want the strongest winning stocks with the highest probability of rising prices!
I’d love to see some frantic buzz in the style of a “final panic” each time you clearly cross important chart brands.
Just then, you have an ideal chance-risk ratio, as great fundamentals are confirmed by large-scale buyouts by professional investors.
In this way you get the chance on your side!
Less successful investors try instead as cheap as possible to enter into shares. However, they accept (without knowing it) a poor chance-risk ratio.
That comes to me – and I hope, from today for you – out of the question. I would like to pay a bit more for a stock if I have a much higher probability of winning.
If you are also prepared to pay this (success) premium, then you stand out from the broad mass of investors and will act successfully on the stock market in the long term.