{"id":5782,"date":"2019-11-27T08:49:58","date_gmt":"2019-11-27T13:49:58","guid":{"rendered":"https:\/\/morpheustrading.com\/blog\/?p=5782"},"modified":"2022-04-06T15:04:58","modified_gmt":"2022-04-06T19:04:58","slug":"plan-the-trade","status":"publish","type":"post","link":"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/","title":{"rendered":"Trading Mini Lesson: Why &#8220;Planning The Trade &#038; Trading The Plan&#8221; Always Pays Off!"},"content":{"rendered":"<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-5808\" src=\"https:\/\/new.morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/discipline-1024x576.jpg\" alt=\"Trading Discipline\" width=\"640\" height=\"360\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/discipline-110x62.jpg 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/discipline-300x169.jpg 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/discipline-768x432.jpg 768w\" sizes=\"auto, (max-width: 640px) 100vw, 640px\" \/><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">TABLE OF CONTENTS<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Its_easy_to_be_a_disciplined_trader_when_trades_are_going_your_way_But_long-term_winners_and_losers_are_determined_by_the_ability_to_%E2%80%9Cplan_your_trade_and_trade_your_plan%E2%80%9D\" >It&#8217;s easy to be a disciplined trader when trades are going your way. But long-term winners and losers are determined by the ability to &#8220;plan your trade and trade your plan.&#8221;<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Continue_reading_to_see_how_%E2%80%9Csticking_to_the_plan%E2%80%9D_enabled_us_to_maximize_profits_in_our_recent_TSLA_swing_trade_despite_the_stock_gapping_sharply_lower_while_long\" >Continue reading to see how &#8220;sticking to the plan&#8221; enabled us to maximize profits in our recent $TSLA swing trade, despite the stock gapping sharply lower while long.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Planning_The_Trade\" >Planning The Trade<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Putting_The_Trading_Plan_Into_Motion\" >Putting The Trading Plan Into Motion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Sticking_To_The_Trading_Plan_When_The_Going_Gets_Rough\" >Sticking To The Trading Plan When The Going Gets Rough<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/morpheustrading.com\/blog\/plan-the-trade\/#Trading_Discipline_Pays_Off\" >Trading Discipline Pays Off<\/a><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Its_easy_to_be_a_disciplined_trader_when_trades_are_going_your_way_But_long-term_winners_and_losers_are_determined_by_the_ability_to_%E2%80%9Cplan_your_trade_and_trade_your_plan%E2%80%9D\"><\/span>It&#8217;s easy to be a disciplined trader when trades are going your way. But long-term winners and losers are determined by the ability to &#8220;plan your trade and trade your plan.&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3><span class=\"ez-toc-section\" id=\"Continue_reading_to_see_how_%E2%80%9Csticking_to_the_plan%E2%80%9D_enabled_us_to_maximize_profits_in_our_recent_TSLA_swing_trade_despite_the_stock_gapping_sharply_lower_while_long\"><\/span>Continue reading to see how &#8220;sticking to the plan&#8221; enabled us to maximize profits in our recent $TSLA swing trade, despite the stock gapping sharply lower while long.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>On November 12, we shared a new blog post about our recent swing trade entry in Tesla ($TSLA).<\/p>\n<p>In that <a href=\"https:\/\/new.morpheustrading.com\/blog\/tsla-breakout-pullback-entry\/\" target=\"_blank\" rel=\"noopener noreferrer\">$TSLA blog post<\/a>, we walked through the charts to explain the rationale behind our buy entry.<\/p>\n<p>At that time, our Tesla trade was already showing an unrealized gain of +7%.<\/p>\n<p>We planned to hold the stock for a projected <a href=\"https:\/\/new.morpheustrading.com\/blog\/swing-trading-vs-day-trading\/\" target=\"_blank\" rel=\"noopener noreferrer\">swing trade<\/a> gain of 10-20%.<\/p>\n<p>However, as is often the case in this business, the trade did not work out exactly as anticipated.<\/p>\n<p>After moving only a few more percent higher, $TSLA suddenly gapped sharply lower on increasing volume.<\/p>\n<p>Nevertheless, we still managed to profit with an average gain of +7% on the winning trade.<\/p>\n<p>Keep reading to discover how &#8220;planning the trade and trading the plan&#8221; enabled us to do so.<\/p>\n<p>Then, watch your trading profits skyrocket when you start doing the same!<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Planning_The_Trade\"><\/span>Planning The Trade<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It is crucial to always have an <em>objective and<\/em> <em>clearly defined plan<\/em> before entering ANY new stock trade.<\/p>\n<p>Having a clear trading plan <em>before <\/em>buying any stock or ETF is a major element of trading success and helps remove emotion from your decisions when the battle between bulls and bears inevitably heats up.<\/p>\n<p>In the November 5 issue of <strong><em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener noreferrer\">The Wagner Daily<\/a> <\/em><\/strong>newsletter, we shared exact details of our Tesla trading plan in advance of the entry.<\/p>\n<p>The following technical commentary and annotated chart was listed for subscribers in that day&#8217;s report:<\/p>\n<p>\u201cThere is one new official setup for Tuesday in $TSLA. We like the big volume gap up, followed by the light volume pullback that stopped short of touching the 10-day MA.<\/p>\n<p>Our entry is over Monday\u2019s high with a stop one point below Monday\u2019s low. The target area is $380 \u2013 $400 area.\u201d<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-5788\" src=\"https:\/\/new.morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/TSLA-buy-setup.png\" alt=\"$TSLA chart\" width=\"837\" height=\"667\" title=\"\" srcset=\"https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/TSLA-buy-setup-110x88.png 110w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/TSLA-buy-setup-300x239.png 300w, https:\/\/morpheustrading.com\/blog\/wp-content\/uploads\/2019\/11\/TSLA-buy-setup-768x612.png 768w\" sizes=\"auto, (max-width: 837px) 100vw, 837px\" \/><\/p>\n<p>Prior to this trade setup, we discussed a price target equivalent to a 10-20% gain.<\/p>\n<p>Our initial sell stop ($307.95) was 4.4% below the $TSLA entry trigger price, giving a <a href=\"https:\/\/new.morpheustrading.com\/blog\/profitable-stock-trading\/\" target=\"_blank\" rel=\"noopener noreferrer\">reward\/risk ratio<\/a> of more than 2 to 1.<\/p>\n<p>Unlike some position trades that we may hold for weeks or months, this was purely a <em>short-term swing trade<\/em> that sought to take advantage of bullish momentum from the previous breakout.<\/p>\n<p>Due to significant overhead resistance from previous highs, our <em>plan for this trade was to quickly sell into strength<\/em> (if possible).<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Putting_The_Trading_Plan_Into_Motion\"><\/span>Putting The Trading Plan Into Motion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Like most winning swing trades, $TSLA immediately rallied sharply higher after our buy entry.<\/p>\n<p>Fueled by the increasing volume of <a href=\"https:\/\/www.investors.com\/how-to-invest\/investors-corner\/accumulation-is-key-in-a-base\/\" target=\"_blank\" rel=\"noopener noreferrer\">institutional accumulation<\/a>, Tesla cruised to a +10% gain over the next six trading sessions before showing signs of stalling (pulling back).<\/p>\n<p>Since our initial plan was to sell with a gain of 10-20%, we decided to sell <em>half<\/em> of the position on November 13.<\/p>\n<p>This initial, partial exit enabled subscribers to lock in a solid gain of +9%.<\/p>\n<p>We were comfortable holding the remaining half position because the <em>price was still trending higher<\/em>&#8211;above both the rising 10-day moving average and short-term uptrend line.<\/p>\n<p>&#8220;Scaling out&#8221; of a trade is a great way to maximize your profits, while minimizing risk.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Sticking_To_The_Trading_Plan_When_The_Going_Gets_Rough\"><\/span>Sticking To The Trading Plan When The Going Gets Rough<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>After we took profits on the partial position, $TSLA rallied to a new &#8220;swing high&#8221; four days later.<\/p>\n<p>However, volume was lower than average and failed to confirm the move higher.<\/p>\n<p>Lacking the critical element of higher turnover to drive the price higher, Tesla unsurprisingly failed the breakout attempt and fell back into its previous trading range the next day.\u00a0<\/p>\n<p>Since our goal in short-term swing trading is to maximize profits, we do <em>not<\/em> want to stick around in a trade where a short-term breakout above a prior high fails to hold.<\/p>\n<p>As such, we <em>immediately<\/em> raised the stop price on the remaining shares in the November 20 issue of our <strong><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener noreferrer\">swing trading newsletter<\/a><\/strong>.<\/p>\n<p>We listed the new, tighter stop price as $345.95, just below the low of the November 19 breakout day (plus a bit of &#8220;wiggle room&#8221;).\u00a0<\/p>\n<p>If the price fell below that key support level, we would still lock in a +7% gain on the second half of the position.<\/p>\n<p>However, the stock suddenly gapped sharply below that stop price on the next day&#8217;s open.<\/p>\n<p>This is shown on the chart below:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone\" src=\"https:\/\/www.morpheustrading.com\/~rick\/\/charts\/2019\/191126TSLA2.png\" alt=\"$TSLA daily\" width=\"860\" height=\"712\" title=\"\"><\/p>\n<p>Tesla shares opened 4% lower on November 22, gapping below near-term support of its 10-day moving average (teal line) and dominant uptrend line (pink line).<\/p>\n<p>Our sell stop at $345.95 immediately triggered on the open, with our actual exit getting filled just below the $340 level.<\/p>\n<p>This enabled subscribers to still register a solid gain of +5% gain on the remaining position.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Trading_Discipline_Pays_Off\"><\/span>Trading Discipline Pays Off<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>We do <em>not<\/em> regret selling the remaining shares for a smaller gain of just +5%.<\/p>\n<p>Likewise, we do not regret selling only <em>half<\/em> of the position for the initial +9% gain.<\/p>\n<p><strong>We simply planned the trade and traded the plan!<\/strong><\/p>\n<p>Operating under this mantra removes emotions from your trades <em>and<\/em> enables you to consistently maintain trading discipline&#8211;two critical factors that determine your long-term trading success.<\/p>\n<p>Since the $TSLA trade was planned\u00a0<em>in advance<\/em> as a short-term swing trade,\u00a0there was <em>absolutely no reason to remain in the trade<\/em> after it gapped below near-term support on heavy volume.<\/p>\n<p>After reviewing the trade in hindsight, we also determined there was no logical reason to sell the remaining shares <em>prior to<\/em> that gap down&#8211;especially since we had already secured a +9% gain on the first exit.\u00a0<\/p>\n<p>In terms of <a href=\"https:\/\/new.morpheustrading.com\/blog\/trading-psychology-setting-stops\/\" target=\"_blank\" rel=\"noopener noreferrer\">trading psychology<\/a>, it is also crucial to maintain a positive attitude when trading. For example, you should never try to hunt for &#8220;sell signals&#8221; that never existed at the time.\u00a0 \u00a0<\/p>\n<p>Although we did nothing wrong, the second half of the trade simply did not work out as expected.\u00a0<\/p>\n<p><strong>That&#8217;s the business of stock trading&#8211;plain and simple!\u00a0 <\/strong><\/p>\n<p>Rather than complaining about how much potential profit we gave back due to the gap down, we focused on what we did well&#8211;selling into strength near the original price target, then raising the stop accordingly.<\/p>\n<p>We followed the clearly defined and objective rules of the Morpheus swing trading strategy.<\/p>\n<p>As always, we simply planned the trade and traded the plan!<\/p>\n<p><em><a href=\"https:\/\/morpheustrading.com\/services\/swing-trade-alerts\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>Sign up now<\/strong><\/a> to learn more about the 17-year proven trading strategy of Morpheus Trading Group. You will also receive the best stock &amp; ETF picks with advance entry, target, and stop prices&#8211;all delivered to your inbox nightly.<\/em><\/p>\n\n\n\n","protected":false},"excerpt":{"rendered":"<p>It&#8217;s easy to be a disciplined trader when trades are going your way. But long-term winners and losers are determined by the ability to &#8220;plan your trade and trade your plan.&#8221; Continue reading to see how &#8220;sticking to the plan&#8221; enabled us to maximize profits in our recent $TSLA swing trade, despite the stock gapping [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5788,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[3],"tags":[],"class_list":["post-5782","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-stock-trading-strategy"],"_links":{"self":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5782","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/comments?post=5782"}],"version-history":[{"count":1,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5782\/revisions"}],"predecessor-version":[{"id":5890,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/posts\/5782\/revisions\/5890"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media\/5788"}],"wp:attachment":[{"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/media?parent=5782"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/categories?post=5782"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/morpheustrading.com\/blog\/wp-json\/wp\/v2\/tags?post=5782"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}