Trading Options: Using Technical Analysis to Design Winning Trades, + Website

CHAPTER 12

Execution and Beyond

To get to this point has taken a lot of work. You have identified the trend, sought out good trading setups, and written plans that can be used for stocks and options. The plan is set. In this chapter we discuss what to do with the plan—not only how and when to enter the trade, but also how to adjust it and when to take profits. This will need to be an on-the-job learning experience for you. No matter how well thought out and detailed your plan is, there will be details that you could not have anticipated. Did the stock trigger and then reverse but not to your stop and then stall the rest of the day? What do you do? Or perhaps you enter a stock and it hits your first target and reverses before you can move up your stop. Do you take profits?

I cannot give you an answer for every situation, and you cannot plan for them all. You just need to do the best you can to prepare so that there are as few unexpected situations as possible, and over time you will become more comfortable with how to deal with them. So let’s go to the first steps.

■ Execution

Now what? You wait. You wait for a stock to move and to trigger—the stock that you have spent hours selecting and culling from the broad universe and then writing a detailed plan for. And there can be a lot of waiting. But there are things to do as you wait. You can set price alerts for your watch list. You can set up the options spreads you are considering to trade in your trading system. Then wait some ...