25/04/2019
Creating a trading plan!
If you’re serious about becoming a trader, a trading plan will be vital. Here are some important assets your trading plan should contain.
Assessing your skill–Have you tested your strategy? Can you follow your strategy without hesitation? If you haven’t mastered your trading strategy yet, it might be best to practice and tweak it until you’re confident in implementing it.
Mental preparation–Trading can be an emotional rollercoaster, so it’s important that you trade stress-free – Be sure that you only open a position if you’re emotionally and psychologically ready.
Set your risk level–When trading, you should set a risk level that you’re comfortable with. Professional traders tend to risk no more than anywhere between 1-5% of their capital – what you choose should be dependent on your trading style and risk tolerance.
Prepare for trading–Before you start each trading day you could follow a series of steps before placing your first trade. For example, research the major news announcements for the day, set up support and resistance zones on your charts, or even read through your trading plan.
Entry and exit rules–Before entering a trade you should know where your stop loss and profit targets are going to be placed.
When entering a trade, the entry should be based on a tested trading strategy. Your trading plan should highlight exactly when and where you are going to enter, what the indicators need to be doing, what the pricing action needs to be doing, and what’s occurring on the different time frames in order for you to enter the trade.
Record everything–Keeping a record of your overall trading performance can help analyse how effective your trading strategy is, and can highlight where you’ve gone wrong if you experience a period of losing trades.
Having a plan is crucial if you want to become a consistent trader – never underestimate the power of planning.
Don't have a DEMAT Account? Get started! Click on 'Signup' to create your own account today itself!
