If you’re serious about trading, you need more than just good instincts. You need a solid plan — one that takes you from the initial idea to the final profit or loss with clarity and confidence.
A professional-grade trading plan breaks down into four key stages: idea, timing, execution and management. Mastering each of these steps will transform your trading and help you approach the markets with purpose.
Let’s start with the trade idea.
Whether it’s Boeing (BA) or MicroStrategy (MSTR), every trade begins with a thesis. Maybe it’s based on technical analysis, like a breakout from a consolidation zone, or perhaps it’s tied to a specific catalyst, such as an earnings report.
Whatever it is, your idea is your foundation — but it’s just the beginning.
Once you have the idea, timing comes into play. Timing is about identifying the right moment to act. For example, if you see MicroStrategy breaking out, you don’t want to chase the move at its peak.
Instead, you might wait for a pullback to a key support level or a retest of the breakout zone. Getting the timing right requires patience and discipline — two qualities that separate successful traders from those who struggle.
Next is execution, and this is where many traders stumble.
You need to know exactly how you’ll enter the trade. Are you using limit orders to control your entry price? Are you scaling into the position to manage risk? Execution is also where you decide how much capital to allocate.
Without a clear plan, execution can become emotional, leading to mistakes like overtrading or chasing price.
Finally, we have management — arguably the most critical part of a trade.
Management begins the moment you enter a position. At this stage, you must decide two things: when you’re happy with your profit and when you’re wrong about the trade.
These decisions should be based on the same logic that led you to enter the trade in the first place. If buyers are in control and your trade idea is still intact, there’s no need to panic over small fluctuations.
But if the stock breaches a critical level, it’s time to exit.
For example, if you enter MSTR at $270 with a target of $327, you know your expected reward-to-risk ratio. If the stock falls below your aggressive entry level, say to $240, that’s your cue to cut losses.
On the other hand, if the stock hits your target, you take the profit — then reevaluate whether a new trade idea is worth pursuing.
The key to success in trading isn’t just having a plan — it’s sticking to it. By following these four steps with every trade, you eliminate guesswork and bring consistency to your trading. And consistency is what turns ideas into profits.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.