Today we are going to talk about WHAT should be in the trading plan of any trader worth their salt. Many, as it turned out, do not know the basic principles of building a trading plan. This article will help beginners understand WHAT to add to their trading arsenal.
The first stage of developing a trading plan is to determine the timeframe. Every trader should know what time frame he is going to look for entry opportunities and build a trading strategy accordingly. As a general rule, terms are divided into three types:
2. Risk management.
Risk control is probably the theme most important in any trading plan. The ability to control risks and follow principles distinguishes a professional from a beginner. In this section, the best rule is the 1-3% rule
3. Market structure.
Every trader should have a trading strategy even before opening a position during periods when the market is trending or moving sideways, and of course be able to correctly determine when the market is moving from one position to another. phase to another
Every market has their own characteristics. Not all traders, for example, can approach the forex market. You need to know where you are trading and use the right tools. It may be worth trying all the markets to understand what is right for you. Study the markets, gain experience.
5. Entry conditions.
The entry point must be chosen by the trader in accordance with the rules prescribed in the strategy. A trader must know when and under what conditions to enter a position. Strategies can be different: based on a retracement or breakout of the level, or you may want to trade according to the intersection of the indicator lines. And, yes, no one forbids the use of all strategies at once, the main thing is not to get confused.
Placing stops is an important part of the strategy. A correctly placed stop can protect you from premature closing of the trade. Failure to place a stop order may result in the loss of all capital. In any case, the strategy of placing stops should be in every trading plan. You can set a stop according to some percentage you have chosen, or you can set a stop for the high or low, it is up to you, but you must decide before entering the position.
A correctly set target and a set take profit help a trader make a profit and not stay in a position until it turns from profitable to unprofitable. There are different ways to fix profits: Fixed-the value you have chosen according to your trading strategy. Trailing stop is a slightly advanced method, the essence of which is that the stop will move along with the price to the distance you choose and close when the price wow against him too much.