Bryan Agosto | Coach
My response is how much are you willing to lose, but that always makes people feel like I am standoffish. So I have adopted the approach to liken trading to eating. With eating habits, you generally have three types of personalities: the convenient eater, the haphazard eater, and the planned eater. These translate well to trading, and we should always strive to be one of these as we trade.
First, you have the convenient personality. A person with a convenient personality will offload the task of getting to consume food to others. People who do this in trading generally have a financial advisor(FA) take control of their accounts and offload the risk to them. This rarely leads to a healthy portfolio(see our previous blog about Financial Advisors), just like stopping at a fast food restaurant will rarely result in a six pack, FA's have a vested interest in increasing commission not your rate of returns.
Secondly, there is the haphazard personality. A person with a haphazard personality will eat whatever they have at home without planning things out. This is a fair way to get by, but will it result in the best foods each time? Most likely not. This is the same as someone who throws money into a 2030 retirement fund in their 401K hoping and praying that there will be enough money there when they need it either in retirement or before.
Finally, there is the planned personality. These are the individuals that have a meal plan that they follow. They plan out their week and identify what is needed to put into each meal to ensure they can enjoy their food when they are ready to cook. This is how we trade at Landshark Education; we plan every week by identifying what we want to trade how we will trade and what the trade will profit or lose(no one wins every time) before the week starts.
If you want to understand how to have a better plan in a market as crazy as we see these past few days, you have come to the right place. This week are hitting some key levels where we could see potential reversals in the market. If there is no reversal what will we do? Follow the plan, just like we should all do as we eat. My storage is full of potential trades in either direction based on what happens tomorrow I plan to eat! What about you?