Why did you enter the trade?

It’s the first thing ask when I review a trader’s trades.

Why did you enter the trade?

It’s a simple question that only takes one sentence. Something like, “the market is in an uptrend and the stock made a breakout-pullback setup that offers 3:1 risk-reward.”

This is not the type of answer most people give me.

Most answers do not define the setup or risk. There’s a lot on feelings, thoughts and predictions of where the stock will go.

The thing is: we are not making predictions. Moreover, we definitely are not trading based on feelings.

We re making trades off expectancy.

Expectancy that is based off repeated patterns that work, and adding a mathematical risk formula that is practically fool proof.

So before every trade, ask yourself why you are taking the trade. Then make sure your answer defines your setup and risk.

For more on swing trading check out my swing service at bullsonwallstreet.com

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