I have traveled around the USA teaching thousands of students how to trade with a lifestyle and one of the tricks I use are 3 x 5 cards. I have watched students respond with such excitement that they actually have confidence again and feel in control of their trades. The cards fit in a pocket, wallet or purse and are easy to access. My problem, let’s say I am rushing to catch a plane and I can’t log onto my computer, is that if my alarm goes off and I don’t have my brain in writing in front of me on a 3 x 5 card…then my real brain freezes and I do nothing. This NOTHING is usually a bad decision. The 3 x 5 cards have literally changed and enhanced not only my trading big time, but also hundreds of students now use this success method for time freedom and making better decisions.
I love using my ETA software to keep track of my practice portfolio and my real portfolios. I would be lost without it. This program makes practice trading so easy, practically forces you through closing the trade. A lot of inexperienced traders don’t practice trade, because they do not see the value of it. I still practice trade everyday. The reason being, is that you can’t trade everything you want all the time. So I practice what I want to trade and then when I come out of a deal and have cash to trade again I know exactly what I want to do because I know the heartbeat of the deal. In addition, as a retired accountant, I use to charge my clients $15 for the form trades get reported on to the IRS and then $5 per trade. That can amount to thousands of dollars a year for tax return fees if you are an active trader …so the ETA software does the work for you and you can print out the schedule at the end of the year and attach it to your tax return as schedule 1 and save a ton of tax preparation fees.
Anyway, back to using 3 x 5 cards to use as a back up for trading, these cards allow me to go on about my day doing anything I want. I can run to the store, go to my kids school, workout or just have fun not thinking about the market. That is what I mean when I say LIFESTYLE TRADING. Nothing could be worse than watching the market so close you have another job! Most students I have taught want their life back, not one more intense time stealer. So with these cards you get to EAT YOUR CAKE AND HAVE IT! Yes, I said it correct, anyone can have a cake and eat. You get to profit in the market on very limited time.
What I do is I take the blank side of a 3 x 5 card and:
1. Write on the top 1/4 of it the details of the trade and underline it
2. On the next 1/4 I write the reason for the trade and underline that
3. Then I divide the bottom of the card in two with a vertical line and On the left side I draw support and resistance lines with $ amounts
4. On the right side I put the cost of my option (or stock) in the middle left and circle it. Then I draw a line up and a line down.
5. If I expect the stock to go down to make money (buy put, sell call, etc…) I will use the up arrow for the stock price I need to exit at a cost (pull the plug) and also a price of the option where I don’t want to risk any more.
6. If I expect the stock to go up to make money I write this information on the down arrow – trying to make the direction of the arrows flow with the trade.
7. Then I go to the remaining arrow and write the stock price my goal is and the price of my option goal
8. At this point I then go to my REAL TIME MARKET (see below for info) and set the alarms on all of these so that it comes to my cell phone and my computer.
At this point, get on with more important things in your life and let the trade rest of the trade come to you! It is such an incredible freeing up of time, and we all need that.
I have edited in my three cards from the trades I did today so you can see exactly what I mean with my real trades.
On the back of the card I keep notes, perhaps if you are in the trade a few days you could log how the option price is going at $X stock price or what was going on in the market.
If an alarm goes off, my first step is to ask question before I make a move:
1. What is the market the stock follows doing?
2. What is the stock doing?
If you expect the stock to go down, you bought puts, and your upper alarm goes off that the trade is going wrong, I will not pull the plug if it is just kissing the resistance goodbye, so I will reset the alarms.
However, if good news comes out, and the market and stock are raging upwards on high volume the party is over and I jump out immediately.
I hope you try this out, because it WORKS!
By Darlene Nelson with Better Trades