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Goal $1.4 Million: Step 4 of 4 - Plan Execution
A real example from my portfolio and tricks you can use for consistent trading success.
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting or investment advice. These are my opinions and observations only. I am not a financial advisor.
Another positive week in the books. Trading is always better when markets are moving higher.
I’m always net long (I expect markets to move up over the long term) but for short term trading, a market that is trending higher is a more enjoyable market to trade.
We’re not in bull market territory yet. Still, it was a decent week.
If you’re a new subscriber, welcome to the newsletter dedicated to trading while working a 9 to 5 so you can leave the 9 to 5!
I’ll keep bringing the value and piles of trading information, you keep showing up and sharing with others, and this train won’t ever stop!
Also, if you are new to A Trader’s Education, you may want to check out the past three newsletters in this series:
We have discussed how to get set up, how to select growth stocks for a portfolio, and how to select options. All of it with a focus on creating an account to implement a covered call strategy.
Focus on Consistency
The hardest part of trading is maintaining a level mental state that does not allow your emotions to run too high or too low. You want to be consistent.
Consistency is a must in order to become a successful trader. Especially if you’re looking to replace your 9 to 5, which is exactly what we have set out to do.
It may sound simple, but to remain consistent you must focus on consistency.
What does this mean exactly?
You need to keep the idea of consistency at the front of your mind while trading. It should be a constant part of your thought process.
If you forget about it, even for a moment, you can find yourself in a trade wondering how you got there and if you should just cut your losses (hint, you probably should).
The only way I know of to maintain this focus on consistency is to have a plan and to execute to that plan ruthlessly.
When you have a plan and stick with it you gain a huge edge. That edge comes from the information you gather that tells you whether your plan is effective or not.
This is where many traders make a huge mistake. HUGE.
Instead of taking time to understand why a plan is or is not working, often traders will start implementing new strategies or new ideas in an attempt to improve performance.
There are thoughts of “my plan is clearly not working but this other strategy sounds effective so I am going to try that instead.”
This happens after only a few days, sometimes just a few hours.
Again, huge mistake.
If you’re not spending at least a couple of weeks with a strategy, sticking to a plan, and analyzing both the positives and negatives, you’re simply doing it wrong.
It takes time to understand what needs adjusting, what needs to go, and what needs to be left alone. I have found this applies to most things in life.
In a world that is seemingly all about instant gratification, you get ahead in trading by taking time to analyze and make changes when others are blindly pushing forward.
You need a larger data sample than a handful of trades to determine if a strategy is right for you or not. Only then can you figure out consistency.
So, give it a couple of weeks. Whatever trading plan you come up with, try it out and take notes on what is working and what isn’t.
When you’ve completed the trial period, take time to read through your notes. Recall what worked and what didn’t and try to understand the why behind each.
In other words, study your wins and losses.
If you can, talk to others about your trades. Simply talking it through can be immensely helpful.
Let me know any time you want to talk through a trade. I love to talk trading!
Plan to make adjustments every couple of weeks based on the information you gather. Keep the adjustments small for at least a month before making any drastic changes.
You can keep it simple, too. Here’s a general example of how I might approach assessing a trade.
Honesty and Making the Right Adjustments
Taking losses is the hardest part of trading and the only way to overcome them is by being honest about why they occurred.
This starts with an honest assessment of your trades, all of them. You will no doubt learn a lot more from your losses which is where more of the focus should be.
The longer you blame others, claim the system is rigged, and ignore those having success around you, the longer you will stay stuck in your trading rut.
Instead, carve out time every week to take a look at every trade. What was your plan going in and why did your trades work? Or why didn’t they work?
Be intentional but don’t insist on making big changes right away. Instead, look for areas to make small adjustments and make one or two at a time. See what the impacts are.
A common mistake is changing the strategy completely after one or two failed trades.
Another mistake is making large, sweeping changes to a winning strategy because it is not getting the level of results you are looking for.
In both cases, the best approach is to take more time and keep changes small. It will help you more clearly see how the changes impact your results.
This brings up another point, you should start small and build up only after finding consistent success. In fact, this is exactly why everyone says start small. You need time to figure things out.
If you are just starting out or if you are struggling through a period of taking losses, it is always a good idea to adjust your trade sizing down.
There is no good reason to increase your trade sizing if you are unable to trade consistently. And there is less of a reason if your trades have been unsuccessful.
Whenever you are on a losing streak, or struggling with consistent trading, the best thing to do is trade less and study more. Trade smaller and less often while studying longer and more often until you get things corrected.
If you take this approach I have no doubt you will increase your ability to trade successfully over the long term.
Last Week’s Trading and Looking Ahead
The Covered Call Strategy (CCS) portfolio had a number of stocks do well last week. You can follow the stock trades I make for free at Savvy Trader by subscribing to the Covered Call Strategy portfolio.
Also stay tuned for Trader Nate Trading! I’m opening up access to every chart, every trading plan, every trade, and every thought behind each trade I make in my account (stocks and options) so you can learn to trade the same way I do.
Ok, the trades.
A name that is not often discussed but squarely on my trading radar at all times is Coupang, Inc (CPNG).
I bought shares for the CCS portfolio a couple weeks ago at $16.07 which is a few pennies above where it closed Friday. So why write about it?
The 20-day simple moving average (SMA) crossing above the 50-day SMA is a bullish, short-term signal. That’s one reason.
After breaking through the 50-day moving average two weeks ago the shares took a breather and sold off but only down to the 50-day SMA, where it held. Reason 2.
Following the bounce off of the 50-day SMA, the candles Thursday and Friday closed strong and well above the open. Friday gapped up to open as well. Reason 3.
Finally, the close on Friday was above the close from the end of the prior week which shows strength. Getting the strong close above this 15.91 level is reason 4.
The set up for CPNG is looking good to me. While waiting on the set up, I was able to sell multiple rounds of covered calls to collect cash.
The set up was strong enough that I also took a small position in call options for CPNG at the $15 strike price, expiring next Friday. If this move continues Monday I expect to take profits and may close the option position entirely.
Notice that the strike price I’m selling at is either near or above the original purchase price for the shares of CPNG I am trading. This ensures a profit if the shares are called away.
Next week I am looking to take quick profits on all trades as volatility is expected to ratchet up. The VIX closed near $17 which is very low relative to recent levels.
I am also keeping an eye on MARA after it made big gains last week moving from $8 to $12 in just five days. An incredible run.
I’m not sure we’ll see it, but if MARA pulls back near $10 I am considering picking up shares for a return to $12 and possibly higher on the strength of Bitcoin.
Twitter Spaces - Chart Reviews, Trading Strategies
Quick Reminder and thank you to everyone that tunes in!
It is a great way to sharpen your chart analyzing skills while hearing about what we are each looking at for the upcoming week.
Link to this week’s Twitter Space: Sunday Trading Prep
I hope you find this information useful each and every week.
If you have any questions, be sure to find me on Twitter @tradernatehere and send me a DM! I am always up for talking trading.
Also, be sure to follow for daily posts as I pursue my goal of educating thousands on the many ways trading options can accelerate you path to early retirement and building generational wealth.
Have a great week of trading ahead!