Trading Plan: Short Selling Parabolics & Overextended Charts

Short Selling Parabolics & Over Extended Charts

Objective:

Shorting overextended charts and minimizing risk by having the odds stacked in my favor before utilizing any capital.

Managing Risk:

I will manage my risk at all times by taking trades only when the following conditions have been met

1) The daily chart is overextended or bouncing on a beaten down chart

2) There is obvious weakness and signs of a trend change by indication of a pullback with high sell volume

3) The chart puts in a lower high

General Rules:

I will only enter a stock on a lower high to minimize risk and to prevent any emotional capital loss caused by chasing a stock down. I realize my emotional capital is limited and can be exhausted by taking trades outside of the trading plan. It is also critical I follow my plan carefully so that data can properly be collected.

If a play is missed, it's ok. Move on.

A weakness of mine is that I am easily influenced so I must cut out all chatrooms, twitter, etc and focus on my own success. These are all distractions and will lead to taking trades outside of the trading plan.

I will be highly selective and employ no capital unless the opportunities are there. I appreciate every trade as it is a privilege. Thus, I will trade intelligently and not take it for granted. Only a few good plays are needed a week to make a great living at this.