I’ve been talking to you a lot lately about how to be prepared for all the stock action we’ve seen since the election…
We also have mounting opportunities coming our way this month and into January.
And by the way, I’m pretty sure it won’t end there.
I envision a market like this for at least the next four years.
So, to get you ready, I’ve given you the hot sectors to watch right now…
The top habits every trader needs to adopt…
And how to create a solid trade plan.
It’s all about taking a breath to learn and review fundamental trading principles so you’ll be on top of your game in a busy market environment like this one.
As a follow-up to Friday’s tutorial about building a trade plan, today, I want to talk to you about what to do when that great trade plan fails.
Because no matter how awesome the plan is, it will happen from time to time…
I’m going to set up this discussion by asking you to pretend you’re in the following situation:
You have a trade plan and as part of that plan, you have a rule that you won’t trade premarket.
That’s a great idea, by the way, for new traders.
In fact, I suggest all new traders follow my 9:45 am Rule.
So you vow not to trade premarket and you’ve got a watchlist with five morning spikers, but none of them work out after the market opens…
Should you break your rule and go after them tomorrow during premarket?
Here’s my Answer…
If you’ve set a rule to avoid trading premarket, don’t break it.
There’s a reason you put that into your plan and it’s probably a good one…
Pre-market trading can be illiquid, less predictable, and more dangerous for newer traders.
Don’t let the temptation of “what if” pull you into uncharted waters.
Basically, the number one rule of a trade plan is: “Don’t change the rules of your trade plan!”
Now, About What’s Happening With the Watchlist…
If you’ve set a rule to avoid trading premarket, don’t break it. If all five stocks fail at the open, that’s actually not a bad thing—it’s a learning opportunity.
It tells you to dig deeper into why certain stocks didn’t perform. Ask yourself:
- Was there a strong catalyst?
- Did the volume support the move you were looking for?
- Is the sector hot right now?
Remember that checklist I told you to make when creating a trade plan?
When most stocks fail, it forces you to zero in on the one that might stick.
For example, if a stock holds above VWAP and shows strong volume into the afternoon, now you’ve got a potential setup worth watching.
That’s much better than scrambling between five different tickers.
And to reassess your watchlist, or even create one in the first place, you need a robust trading platform that offers stock screening, charting, technical indicators, and more.
My top pick is StocksToTrade and I use it every day.
It covers all the bases and has everything I look for in a platform. It also has a selection of add-on alert services so you can stay ahead of the curve.
Grab your 14-day StocksToTrade trial today — it’s only $7!
And here’s another tip…
As newer traders, the afternoon is often your best friend. It gives you time to focus, evaluate, and make decisions without the frenzy of the open. The opening bell can be stressful and distracting.
And remember that trading isn’t about chasing action all day long. It’s about patience and precision.
If nothing fits your criteria, that’s okay! Appreciate the freedom trading offers and step away.
There will always be another trade, another day, another opportunity.
My Final Thoughts…
In summary, here’s what to do when your trading plan fails. Unfortunately, it happens sometimes and you should know how to handle it…
- Don’t break your rules (like the premarket rule in the example above)—stay disciplined.
- Focus on why your setups didn’t work and what separates the winners from the losers.
- Be selective and patient. If nothing fits, save your trades for when it really counts.
For more advice and trading strategies, join our StocksToTrade community.
We have tons of free live webinars.
They run all day and offer tips and tricks, info on our algorithmic Oracle trading system, and other valuable training.
Have a great day, everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade