We’re more than halfway through my series on tweaks to your trading plan based on asset class! And when it comes to stocks, the menu is wide open.
Unlike Forex, where you’re choosing a currency pair (see Monday’s post here)…
Or futures, where I recommend focusing on one contract (see Tuesday’s post here)…
With stocks you’ve got literally thousands of tickers to choose from – across different sectors, countries, and market caps. That can feel exciting — but also overwhelming.
So the question becomes: how do you narrow it down into something you can actually build a trading plan around?
Here’s how I break it down — and a few key tweaks you can use as you build or refine your plan.
1. Decide Which Stocks to Trade
You don’t have to trade just one stock — but you can, if it’s active enough.
I tend to look at the stock world in a fewof ways. This is my view, broken down for you to consider as you narrow in on your plan.
First, there’s U.S. stocks vs. everything else. This isn’t just American pride – the numbers don’t lie. U.S. stocks tend to move more and grow more over time than many international stocks. That doesn’t mean you can’t trade non-U.S. stocks — but I suggest picking a lane. Either U.S., or a specific international market.
Next is capitalization. That’s just the current individual share price multiplied by the number of shares outstanding. You’ll hear a lot about large caps in the news — tech stocks, AI, the S&P 500. And yes, bigger names generally move more and create more opportunity. But you don’t have to stick with them. Medium and small caps can provide plenty of setups too.
Simple pro tip: look at the history of how the stock moves. Check one to three years of data if you can, and make sure it provides the type of opportunities you want.
And then there’s steady vs. growth-oriented stocks. This isn’t the same as capitalization. Small caps can grow explosively. Some large caps can move smoothly for a while, then react strongly to earnings.
- If you lean toward growth names — again, often tech and AI — just know you’ll need to track earnings announcements and related sector reports closely.
- With steadier names, you may have fewer outside factors to monitor, but the flipside is smaller moves.
Bottom line: narrow your stock universe so you’re not spreading yourself too thin.
2. Get Position Sizing Right
Once you’ve picked your stocks, the next tweak is position sizing.
That simply means: how many shares you buy, multiplied by the share price at your order entry.
Here’s the key: never risk more than 5% of your total account on one trade.
Because stock prices range so widely, this can trip people up. For example, buying 100 shares of a $20 stock is not the same as buying 100 shares of a $200 stock.
You can fine-tune this by using protective stop orders. For example, if you buy a stock at $50, you might also enter an order to sell if shares drop down to$48. Some traders don’t like placing stops right at the time of entry,since extravolatility can shake them out, I get that.. The key here is to make sure your position size aligns withyour risk tolerance.
3. Be Extra Careful if You Short Stocks
The last tweak is for those of you who plan to short — meaning selling borrowed shares in hopes of buying them back at lower share price later.
And here’s my advice: if shorting is in your trading plan, your trade management has to be rock solid. This is technically Section 3D when you apply my First 40 method to build your plan.
Because if you’re wrong on a short, there’s no natural ceiling. A stock can keep going higher… and higher… and higher.
Yes, your broker might eventually step in with a margin call — those “scary stories” traders used to swap back in the day. But you don’t want to get anywhere close to that.
So if shorting is part of your plan, make sure your protection strategies are in place before you hit the sell button.
These are just a few pro tips for how to make your stock trading plan strong and realistic.
Next up, I’ll wrap up this series with some thoughts on options.
In the meantime, I’d love to hear from you:
👉 Which of these tweaks fits into your current stock trading plan?
👉 Are you more drawn to steady movers, or to fast-growing stocks?
Drop a comment below — let’s compare notes.
~Hima
PS You’ve got one more chance to join me LIVE for my free Trading Plan Breakthrough Workshop where I show you the entire process for how you can build a trading plan for any market using my proven framework! Claim your seat and join me live Thu Sep 25th from 8:00 PM – 9:00 PM ET
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