How to Build the Perfect Trading
To become a successful entrepreneur, we definitely need a well-planned planning on the business we work. Similarly, if we want to become a reliable trader. Then, What are the components of a good trading plan?
Here are 10 important plans in trading.
1. Assess Skills
Are you ready for Trading? Have you tested your trading system and believe it will work well? Can you follow your trading system signal without hesitation? Trade in the market is a battle of sellers and buyers. Professional traders are in fact ready to take advantage of their less-than-planned traders, and you have to pay off the expensive mistakes you make.
2. Mental Preparation
How do you feel? do you get a good night’s sleep? whether you’re emotional and psychologically unprepared to fight in the market, if he then you risk losing everything. This is guaranteed when you are angry, dizzy, busy or distracted by tasks.
3. Set Risk Level
What is your portfolio if you are risking each trade? It can range from approximately 1% as much as 5% of your portfolio on a particular trading day. That means if you lose the amount at any point in a day, you have to go out. This will depend on your trading style and risk tolerance. there is still tomorrow for your pleasant trading.
4. Set Purpose
Before you decide to enter the market, set realistic profit target and risk / reward ratio. What is the minimum / reward risk you will receive? Many merchants will not take trade unless profit potential is at least three times greater than risk. For example, if your stop loss is $ 1 loss, your goal should be $ 3 profit. Set weekly, monthly and yearly profit goals in percentage of your portfolio, and re-evaluate on a regular basis.
5. What your task is
Before the market opens, what happens around the world? Is the market up trend or down trend? Are futures indexes such as S & P 500 or Nasdaq 100 traded on the stock market up trend or down trend in pre-market? The futures index is a good way to measure the market mood before the market opens. When will economic data be released? Put a list on the wall in front of you and decide whether you want to trade ahead of important economic reports. For most traders, it is best to wait until the report is released from taking unnecessary risks. Professional trading traders are based on probability and they are not gambling. for a risk.
6. Trading Preparation
Before starting trading, check your trading device, your trading software and your internet connection connection. Remember, this is a business, and any small hassle will be expensive.
7. Define the Market Out Rules
Most traders make mistakes by concentrating 90% or more of their efforts in looking for market signals, but giving very little attention to when and where to go out. Many traders can not get out of the market if they are in a state of loss because they do not want to take any harm. If your mind is like that, then you will not make it as a merchant. Do not be offended, professional traders lose trade more than they earn, but by managing money and limiting losses, they can still benefit.
Before you enter trade, you should know where your exit is. There are at least two for each trade. First, how is your stop loss if the trade is against you? Must be written. Stop because mental factors are not counted. Second, every trade must have a profit target. Once you get there, close some of your positions and you can move your stop loss across your position to reach the break even point if you want. As discussed above, never risk more than the percentage of your portfolio set in any trade.
8. Define the Login rule
It comes after tips for outgoing rules for the reason: outgoing is far more important than entry. Typical entry rules are roughly like this: “If a signal with target analysis is at least three times greater than my stop loss, we can enter in that position.” Your system should be complicated enough to be effective, but simple enough to facilitate an inbound decision the right one. If you have 20 conditions that need to be met and many are subjective, you will find it difficult if not impossible to really do trading.
Robots often make merchants better than humans, which can explain why nearly 50% of all trades that are now happening on the New York Stock Exchange are computer-generated programs. Computers do not need to think or feel good about making trades. If conditions are met, they enter. When trading goes the wrong way or hits profit targets, they go out. They are not angry at the market or feel invincible after making a decision that turns out to be wrong. Every decision is based on probability.
A Trader should know where the market has the potential to pause or otherwise, they then have to determine which one they will take. A plan should be neatly organized when you are trading, but with re-evaluation once the market has closed. This is to adjust the changes to market conditions and adjust the skill level as a trader. Every trader has to write their own plans, with their own personal and trading style trading account. Using someone else’s plan does not reflect your trading characteristics.
10. Trading Is a Business
Trading is a business, so you should treat it like that if you want to be successful. Read some books, buy a charting program, open a brokerage account and start trading instead of a business plan, that’s a mistake. “If you do not follow the trading plan you are writing, there is a disaster court every time you enter the market,” John Novak.