In life, we often have to make many choices between good, better and best. A great example of this is how we spend our time.

• GOOD: Spend an hour per day on social media keeping in touch with family and friends.
• BETTER: Spend that time talking with family and friends personally.
• BEST: Spend that time with your family instead of keeping up with the lives of people you barely remember from high school.

In trading, there are also many choices between good, better and best. For example, many new investors spend lots of time and energy staying up to date with the latest news events on the stocks that they own. Some might state that this is a “good” use of their time. We would argue that a “better” choice would be to spend that time focused on the management of the trade (risk, reward, position sizing and probability of success). Finally, we would say that the “best” choice would be to apply technical and fundamental analysis before ever entering the trade.

We have never met a highly successful trader who became successful because he or she panicked better than everyone else. Following the latest news story is a panicky way of trading. The idea that you will capture the news, place your trade and profit from it on a regular basis is a flawed idea. The reality is that in today’s world of high frequency trading systems and algorithms, prices change far too quickly for any non-professional trader to profit based on speed.

Instead, the best choice is to do your work ahead of entering into the trade and to then be very skeptical of any and all news. Often, people will buy and sell poorly because they trade the news announcements backwards. In fact, they typically buy on the good news right as professionals are selling!

The professionals were buying before any news hit the wires because the fundamentals and technicals had been improving. Then, the professionals use the big spike higher in the stock (on the news release) to take profits. Thus, the famous adage of Wall Street, “Buy the rumor and sell the news!”

So, what can the non-professional investor do?

The best choice is to nail down your research before entering into a new position. By the time you have entered into a trade, you should have considered a checklist of information. For example, at Investview, we provide our members with trading checklists for a multitude of trading strategies. Here is an example showing our 10-point trading checklist for entering into a “bullish breakout” strategy:

If you properly used the above 10-point trading checklist before every bullish breakout strategy, then you have increased your probability of successful trades using that strategy.

For example, at Investview, we recently highlighted a bullish breakout trade on Lions Gate Entertainment Corp. (NYSE: LGF) in one of our newsletters (see chart). By utilizing the above pre-trade checklist, we were able to confirm the trade passed our pre-trade checklist before we entered into the trade.

• The stock trend is healthy over the short-term and long-term time frames.
• Based on the supply and demand visible in the chart, the shares are more likely to go higher than not.
• There is a trading pattern that typically leads to higher prices.
• There is a strong probability that any news you don’t currently “know” is likely to be positive based on the price action in shares.

By utilizing a pre-trade checklist, we and our newsletter subscribers avoided trading the stock around the most volatile period (earnings) when something chaotic and unexpected is most likely to occur. In addition, we have a game plan with an exit strategy if we are right or wrong. Most importantly, we are “best” prepared for this trade and do not have to micromanage the position. Let’s face it, most of the decisions that investors make based on emotions or something as fickle as news are likely to be wrong anyways!