Before trade make a tarding plan.
How can we identify the market? whether its on a BUY or SELL arena?,In this article I’ll go over how to create a simple trading plan that you can follow. But first let’s discuss why this step is necessary for any aspiring trader.
How can we identify the market? whether its on a BUY or SELL arena?,In this article I’ll go over how to create a simple trading plan that you can follow. But first let’s discuss why this step is necessary for any aspiring trader.
As human beings we are prone to emotions. We trade on hope and fear. Having a trading plan helps to eliminate at least some of the emotions that are inherent with a risky activity like trading. Logical traders who plan their trades are successful traders.
Each trading plan should include 3 main parts: A way to enter the market, a way to Limit your risk and a way to take profits once you’re in a winning trade.
Part 1 of any trading plan is the entry
The first part of any trading plan involves the entry. You should know exactly when you should get in a trade. Have you entry criteria written on a post it note and slap that note on your monitor so that you can always keep an eye on it.you can enter to a trade by using technical and fundamental analysis (we are talking tech & fund analysis on our next post) In addition to this, you should know your reasons for the entry, why you enter a particular trade.
Part 2 – Define your risk
The first thing you should do after you enter any trade is to limit your risk. You do this by having pre planned exit criteria and knowing beforehand where to put your stoploss. Once the stoploss is set, don’t move it to allow “more room for the trade to breathe”. Only move the stoploss if a trade goes in your favor to lock in profits.. Moving the stoploss to allow more room is one of the biggest trading mistakes that newer traders make. Always keep the stoploss where your trading plan says that it should be.
Limiting the risk is probably one of the most important distinctions between losing and winning traders. Losing traders trade without a trading plan or a stop loss and they HOPE that price stops and reverses once they’re in a losing position. Winning traders know beforehand when they will get out of a losing trade.
Part 3 – Have a predefined way to take profits
The last part that any trading plan should include a defined way to take profits once you’re in a winning position. This doesn’t mean that you should always have a set take profit order that limits your upside potential. You can use stop losses to lock in profits instead. The exit not the entry is where the money is being made so you should always know in advance when to cash in those wins.
NOTE: 1-before you placing a trade keep in mind that you need lack of patience.
2-don't be greedy and be discipline.
3-make stop loss and take profit according to your money management.
click here to read more about trading discipline
well from this article you found 3 steps to enter to a trade, first finding the entry point through tech or fundamental analysis,second risk and money management and finally taking the profit out.
this is not enough for you, in our next lesson we are briefly discussing about the entry point with the help of technical and fundamental analysis, dont miss it , bye bye.
