Trading Plan – Do You Have it ? – When people start trading, they will focus on finding the most profitable trading strategies. Having the right strategy has been, traders usually think that they just need to apply it and the profits will come. But there is one thing that is usually forgotten by traders – trading plan.
What is a Trading Plan?
Trading plan is a written list of actions that must be done to achieve the purpose of trading. This list can consist of various trading method or a detailed explanation of the process of trading. The plan provides a trader with an answer about what, why, how and when it should be done so that the trading strategy becomes profitable.
Why Trading Plan required?
The first thing to do by someone who is wise, when he started a business is to create a business plan. He will explain the objectives, measures to achieve it and all aspects of business in this plan. The same is true in trading, a trader must make a trading plan before he started working on the currency market. When implementing a trading plan that has been carefully planned, it takes discipline and prudence. Having a clear objective is one of the keys to success for a trader.
A clear plan will motivate the trader to carry out his intention. Besides this, it provides an opportunity to compare the results achieved with the planned. Otherwise there is a plan, it will be difficult to determine whether a trader has achieved the goal or not. The other advantage of a trading plan is that it helps to make an appropriate decision in critical situations, when emotions can make a trader becomes confused. As market conditions change often, it is very important to know how to react to various situations. Thus, the trading plan will provide an opportunity to control.
The contents of the Trading Plan
There are no specific rules about how the shape of a trading plan and consists of just anything. The contents of a trading plan usually depends on the trader, because the plan is made in the form as comfortable as possible for him. However, the contents of a trading plan can be divided into three main parts: personal, business and trading. The private parts should contain personal point of view about the purpose of a trader, the motivation and the means to succeed.
The viewpoint of this kind must be believed and run the business as hard as possible in real life regardless of any challenges and obstacles that will arise. The private parts should not relate to the technical aspects, only contains desires, aspirations and expectations of the trading process. For example, a trader expects that trading will give him the opportunity to spend more time with his family. The business section contains all things related to trading: the knowledge and skills you want to use by a trader.
It is also necessary to establish a trading objectives in order to improve trading skills. It would be better if the goal is not to do with money, but with the development of trading. For example, trading goals for the first year is to increase the volume and minimize losses. A trader should consider all the knowledge shortages Forex Avatrade feedback market in order to prevent losses that may occur. Part of trading is the most important part of the plan.
This section contains detailed step-by-step of the trading process. Things like time period, preferred strategy, trading terms, volume and more.Financial component did not play last role in trading. So, you should think about money management. It is important to protect the exhaustion of money in the account. To accomplish this, a trader must decide how big a part of the balances that can be used in trading. As well as the benefits to be expected, this should also be calculated and added to the trading plan. The last thing that should be included is an emergency plan that is supposed to be used in case of occurrence of unforeseen circumstances.
It is one of the keys of success of a trader, to know how to actioning such situations. The worst conditions that may occur should be predictable and things like this should not come as a surprise to a trader. Having a trading plan is ready, you should just stay implement it. Notice at the time of trading, required to perform the record of what has been done to be able to compare the actual results with what has been planned.