Now, there are just over 250 trading days in the year. Let’s say you’re an active trader and traded on average 3 top penny stocks per day. That adds up to 750 individual trades. Unless you have a photographic memory, you’ll probably only remember a handful of these trades, maybe your big winners or losers, or some interesting story that is tied into the trade. However, there is no way you’re going to remember all of them.
The time you spend in front of your screens can either be valuable or a waste, it’s really up to you. A valuable way to spend your time is by reviewing. It’s more or less the same thing professional sports teams do when they study video footage of their opponents or previous game(s). They are examining to see if there is anything useful that they can find for their next encounter with the top penny stocks.
You can do the same thing by keeping a journal. Now, you don’t have to actually sit down and write in a notebook, if writing on your computer is easier, that works as well. The key is start recording information about your trades, thought process and tendencies.
If you’re unsure about what to journal here is some help:
Trade information: the time when the trades were made, whether you bought or sold, number of shares, holding period, and profit/loss.
Trade Thesis: In this section you would write about why you got into the trade and explain your edge in the trade.
For example, let’s say the stock price of a company was up 10% on a rumor that it might seek to put the company for sale. However, an hour later a company spokesperson comes out and denies the rumor. Some traders might start shorting the stock off that headline. Their thesis is that the stock price rose on a belief that turned out to be false and because of that the stock should sell off.
Well Being: In this part you want to write down about how you felt going into the trading day. For example, did you feel tired/refreshed, were you distracted/focused, did you start your day early/late/on time. Those are just some things worth considering. Some traders trade very poorly if they are hungover, while others don’t trade well without their coffee and breakfast. Find out what works for you and what doesn’t, and focus on winning with the top penny stocks.
Execution: Before every trade you should have your risk/reward mapped out. For example, I’m going to get in at this price and out here if i am wrong.
Once you know what your execution strategy is, then compare it to how you actually traded your plan. For example, let’s say you wanted to exit your long if the stock price dropped to $10, but for whatever reason you got out at $10.05.
It’s worth trying to answer why you were able or unable to follow through on the trading plan.
There is a lot more that you can include in your journal, these were just some ideas for you. The most important thing to do is journal, study and strive to improve trading the top penny stocks.