How I Think About Trading: A Simple Framework for Reading Markets, Managing Risk & Executing Trades

People ask me about stocks all the time. Should I buy this? Should I sell that? What do you think this stock is going to do?

I’ve been in and around the capital markets for more than 20 years, but I’m not interested in telling somebody what to buy or sell. I’d rather show them how I think about a trade.

That’s really the spirit behind my trading process. I want to understand what the market is telling me, keep the process simple, know the trade before I enter, protect my downside if I’m wrong and give myself room to make money if I’m right. I’m not trying to predict the future perfectly. I’m trying to recognize a setup, understand the risk and execute it with discipline.

The market is a language

Before I understood charting, stocks could look like they were just moving around randomly. Once I started understanding price action, support, resistance, trend, volume and a few recurring patterns, I started seeing structure. That’s why I think of technical analysis as a language.

I don’t need every indicator ever invented. I don’t want 20 layers on a chart creating analysis paralysis. I want enough information to answer a few useful questions: What is the stock actually doing? Where is the structure? Where might the setup be? What would tell me I’m wrong?

Markets are emotional. People get excited when something is running and scared when something is falling. I can feel those emotions too. My goal is to see through them and make a decision based on what the stock is actually doing rather than what I hope it will do.

If I buy something at $1 and want it to go to $10, great. My hope has nothing to do with the chart. If the setup breaks down, I need to respect that information. That’s a big part of what I call trading zen: staying level-headed enough to act on the evidence in front of me.

I keep the setups simple

The two setups I come back to most are swing trades and breakouts. A swing trade looks for movement between areas of support and resistance, or within a broader trend. A breakout looks for price to push through an important resistance level and potentially begin a new move.

I don’t need to trade every pattern. One of the lessons I learned while developing my own process was to stop trying to play everything. Find a setup. Learn what it looks like. Watch it repeat. Get better at executing it. Simple and repeatable is more useful to me than complicated and impressive.

Support and resistance give me the basic structure. If a stock is selling down toward support, I’m watching to see whether buyers show up and the level holds. If it’s moving toward resistance, I’m watching to see whether it stalls or breaks through. When resistance breaks, that old resistance can become new support. When support breaks, the structure can shift the other way.

That gives me something concrete to trade around instead of simply chasing movement.

I want to know the trade before I make it

Before I enter, I want to know what setup I’m trading, where I want to enter, where I think the trade could go, where the thesis fails, where my stop belongs and whether the potential reward makes sense relative to the risk.

I don’t want to invent those answers after I’m emotionally involved in the position. If I know the thesis before I enter, I have something to compare reality against as the trade develops.

A lot of trading attention goes to upside. I spend a lot of time thinking about what happens if I’m wrong. If I buy near support and support fails, I don’t want to ride a broken setup indefinitely while hoping it comes back someday. I’d rather preserve the capital.

I’ve been shaken out of trades before. Sometimes a stock briefly breaks a level, takes me out and then runs. It happens. My view is still simple: getting shaken out is better than getting blown out. If the setup comes back, I can reassess it. I can always buy it back.

Let a good move work

Risk management isn’t only about getting out of bad trades. It’s also about not getting out of a good move too early.

If a stock is making higher highs and higher lows, I can follow that trend upward until the structure changes. I can move my protective level higher as the stock rises or use a trailing stop depending on the setup. I’m not trying to nail the exact top. I want to capture a meaningful part of the move and protect more of the gain as it develops.

Selling is where FOMO tends to get loud. What if it keeps going? What if I’m leaving money on the table? Maybe I am. But one of the best trading lessons I ever learned is that I can always buy it back. Selling a trade doesn’t mean I’ve lost the right to trade that stock again.

That distinction also helps me separate the company from the trade. I can like a company and still exit a trade. I can believe in a long-term story while recognizing that the short-term technical setup I entered has failed. I want to stay clear about which game I’m playing.

If you want the company-building lens behind many of the securities I follow, see How I Think About Business Strategy & Transformation. It is a different discipline, but understanding the distinction between the company and the security is useful.

Position size changes the psychology

I have a simple personal gauge for position size: how anxious does the trade make me feel?

If I’m unusually nervous the moment I enter, there’s a good chance I’m too heavy. That doesn’t replace the actual math of risk, liquidity and portfolio allocation. It’s another signal. I want a position large enough to matter if I’m right, but not so large that emotion takes over my decision-making.

That self-awareness is one of the places trading intersects with my broader thinking about Personal Growth & Conscious Living: notice what is happening internally, then make the next decision deliberately rather than automatically.

When I’m learning or testing something new, I start smaller. I’d rather earn confidence through repetition than assume I’ve mastered a strategy because I read about it once.

Plan it, trade it, review it

I believe strongly in keeping a trading journal because I don’t want every trade to disappear the moment I close it. I want to know what setup I saw, where I entered, where I planned to exit, where the stop was, what actually happened and what I learned.

My own trading notes have been built this way for years. I make observations, notice mistakes, adjust the process, test something again and keep going. The goal isn’t to become a trader who never makes a mistake. It’s to become one who learns from them.

I also don’t want trading to consume my life. If I identify an important price level, I can set an alert and let the market come to me. I can work, train, take a meeting or do something else and come back when the stock gives me a reason to pay attention. Trading should fit into my life. My life shouldn’t disappear into trading.

My trading framework

If I boil all of this down, my process is pretty simple: read the structure, find the setup, know the trade before entering it, protect the downside, let a good move work, exit when the thesis changes, review what happened and keep improving.

It doesn’t eliminate risk and it doesn’t make every trade work. It gives me a disciplined way to participate in an uncertain market.

This is the centerpiece of my Trading & Markets series. From here I go deeper into how I read charts, Trading Zen, support and resistance, swing and breakout setups, planning a trade before entering it, and why I keep a trading journal as those pieces are published.

If you want to understand the early-stage companies underneath many of the securities I follow, that’s a different discipline. Start with What Is Public Venture Capital?. If you’re on the company side trying to finance the venture, see How to Raise Capital for Your Business.

Explore the broader Capital & Markets hub.

This article is for informational and educational purposes only. It reflects my personal trading approach and opinions and is not investment, financial, legal or tax advice. Trading and investing involve risk, including possible loss of capital. Do your own research and make decisions appropriate to your circumstances.