Jumping into the trade market without a proper plan would land one in trouble and chaos. The market journey should begin with the roadmap of the trading plan. A successful trading plan not only incorporates strategies but also addresses risks, entry and exit points. Every trading plan should include the following aspects.
- Assess the skills: Question yourself whether you are ready to trade before stepping in. The trading market is literally a war between givers and takers. The loss of one is a profit of the other. So, while planning we should ensure that we are good enough technically and psychologically to take up the task and stress too!
- Set ambitions: Setting goals or targets is the essential factor of planning. Calculate and set the risk/reward ratio. Additionally, lay down monthly/yearly profit expectations.
- Prepare prior to the start: It is important to watch stock news and updates before the start of the market. Check whether international markets are opening in high or low and index features like NASDAQ are good or bad. If we do cryptocurrency trading, we can check the tool, read more about Crypto Code for knowing the coin value predictions from the experts.
- Entry/exit rules: The major mistake which many traders do is that they forget to plan the exact entry and exit points. The motto of every trade is minimizing loss and attaining profit. If a trader is already low, he will mostly choose to hold the shares rather than taking risk of losing the remaining. A good professional trader concentrates on managing money, and do not actually care about losing trade. Do not forget to exit when the target is achieved or if the trade goes in a different way.
- Set the risk level: We should assess and evaluate our tolerance to risks. We can set a tolerance range between 1% and 5% of the capital. Unfortunately, if loss hits beyond this level, it is thoughtful to exit and prepare for the next day market.
- Learn from the outcomes: At the end of the day, sit and write down the loss or profit and the experiences learned. This helps in opting for a better trading plan.
Success never comes easy. It is a prolonged process of learning, researching, applying and correcting mistakes if any. Every trading day is an experience. Building a successful trading plan, incorporating these key elements will definitely assist in building the trade.