Trading can be seen as a sea of opportunity waiting to be explored. Nevertheless, traders who are not adequately ready to board on this adventure may find sinking instead of swimming. Just as the ship captain needs a map to navigate their ship’s path, traders need some strategies
and plan to lead them through their trades. We as a human don’t have any idea what is next? We don’t know whether there is any life going to exist or not? But, the human being has the capability to face the improbability of the future with curiosity and positivity. There is hope, the hope of living, hope of having a happy life and we make plans for our future and work on that to have one.
Similarly, traders cannot predict their next trade but still, the next step should be planned and strategized. The experienced traders already know that having a trading plan is essential for long term success.
What about you? Are you not aware of what is a trading plan entails? Let’s have look at some key points which are included in a trading plan to get started;
Take a moment to analyze your both short term and long-term goals before starting your trading day. Ask yourself which one you are about to achieve, and which one may need a bit of change. Are your profits realistic? Have you evaluated risk or reward ratios?
A trader’s success depends upon his goals, so it’s essential to reserve some time to think about your trades carefully.
Instruments to trade
Trading instruments generally refer to the different types of markets you can trade. Sometimes, it is called securities, they vary from commodity futures to stocks and CFDs, to currencies and metals and many more. So, choose the instrument you want to trade after studying the market.
Time can be critical depending upon the instrument you intend to trade. For example, forex traders might want to isolate the times when the market is most active. When the market is highly active it usually translates into volatility, which increases upside potential.
Trading generally also depends upon mood. If you feel refreshed and energized in the morning it could the best session, if not, you can try the afternoon or evening sessions.
This is the place where your trading strategies and plans come into play. Make sure the strategy that you want to employ is compatible with the instrument you have chosen to trade. Plan the entry signals you will look for, and form potential exits. It may be brilliant to use the two exit rules: the first should be your stop loss (LS), and second should be your take profit (TP). The creation of these signals prevents you from being a victim to the emotional trading.