Creating your own trading plan can be a tough job. However, it pays off when you know that you have a disaster avoidance plan that will keep you from ruining your trading career.
Here are some tips you can use when you are creating your own trading plan.
Assessing Your Skills
You should always assess your skills before you try a certain thing. In trading, ask yourself whether you are truly ready to trade.
It’s not a bad idea to test your trading strategy or trading system through the use of paper trading. Check whether you are really confident the system would work properly in different market conditions.
Also, check if you can follow your trading signals without hesitation. Because trading the market is a battle against emotion, you should try not to veer away from your trading strategy.Get Wibest Brokers List at our website
Prepare Your Mind
Always remember that although you want to minimize the effect of your emotions to your trading plan, you should still take care of your emotional health. The same goes for your mental health.
Some traders, due to lack of understanding of their risk tolerance, experience frustration and sleepless nights because of their anxiety over their trades.
Prepare yourself mentally for the upcoming trading battles every day that you trade. Put yourself in the zone, and always avoid distractions.
Set Your Risk Level
Ask yourself how much of your portfolio or capital you are willing to risk in one trade. The amount of risks you’ll experience can vary. However, it shouldn’t be greater than 5% of your portfolio on one trade.
What that means is that you split when you lose that amount at any point in the day. You take a break and try to calm down and recover from the loss to fight the trading world another day.
Set Your Goals
Before you start trading for the day, set your profit targets and risk-reward ratios. Ask yourself the minimum level of risk-reward tradeoff you will accept.
Remember to set weekly, monthly, or even yearly profit goals in dollar or percentage of your portfolio. Always see if they still reflect what you want to achieve.
Keep Abreast of the Market Situation
Before you start the fight with the markets, see what’s going on in the market. Check if it is going up or down. You can start by the checking indices and futures markets to see how the market feels before the opening bell rings.
Then, for the week, look at an economic calendar and mark the dates of the upcoming earnings or economic data that are due.
Usually, it’s better to wait until the report is released since the period during and after the release can spur high volatility and can cause wild swings in prices.
Analyze Your Performance
After every trading day, add up the losses and profits you got. But more importantly, know how you got them and why you got them.
Analyze the way you performed and keep notes on the areas you think you did well and areas you did poorly. There will always be losing trades, but there will always be lessons in those losses, too.Check out Wibest Broker Crypto News at our site’s news section