Practice plan - Step 2. The trading process

Ok - before I get into this bit of the plan, a few more quotes on complication:

(And - for the sake of posterity and proper citation, the book that all this comes from:Trading from Your Gut: How to Use Right Brain Instinct & Left Brain Smarts to Become a Master Trader).

'Our logical mind imagines that if trading were simple, more traders would be successful; therefore, trading must be complicated. ... The left brain doesn't realize that the relative lack of attention to the right brain's importance in trading, not the lack of information, makes trading difficult for most people.'

(Is that me all over or what?!?!)

'This is the reason so many traders seek gurus. Their logical brains don't believe that trading can be simple, so they try to seek out the hidden knowledge that must be missing from their trading. Lacking this secret information, traders often are hesitant and unconfident in their trading. The internal conflict between what their left brain tells them is required and the simple truth that trading is actually very simple undermines this confidence. So traders seek out others who can tell them what they think must be missing. They believe that if they get the secret information, they will know enough to trade confidently. ... Despite what some people tell you, no secrets are involved. The art of the trade comes from simplicity, not complication, and from seeing the big picture.'

Me again. That is why I keep asking why/how. I have read almost the exact same thing several times on Scott's blog, but I didn't believe it. Me and hard lessons; just shoot me already.

Now - back to work.

The best practice for trading... is well, trading. Over and over again. Systematically. By process.

Here is the process that I intend to practice by, i.e., train my intuition by (and eventually trade by):

1. Analyze the market state - Determine whether it is a good time to consider purchases, short sales, or neither.
2. Hunt for good stocks - Find stocks that fit the strategy you are trading, and that reflect good potential buys or sells that harmonize with the overall market state.
3. Determine the required trigger behavior - Determine what each stock will have to do before you would buy or sell it; set appropriate market alerts so you will know if this behavior occurs.
4. Prepare and execute orders - Prepare the entry and exit criteria and quantity for any trades so that you are ready to place an order if an alert triggers. If an alert does trigger, check the overall market again and then place the order.

Again - nothing new here at all. In fact, a lot of us are probably implementing this to some degree. But here it is written out. The book goes onto break down the steps practically which was very helpful to me. I plan on doing my own breakdown of the steps in separate blog posts - together these will constitute my 'new' trading plan.