Building a Trading Plan
Building a trading plan and running it well is closely related to discipline. But discipline alone is not enough, traders must have super strict discipline. Having super strict discipline is the most important character of a successful trader. The super strict discipline that traders need to carry out the trading plan that the trader built earlier.
The trading plan itself is a guide to what a trader should do, why, when, and how a trader will do it. The trading plan covers the personality as a trader, profit targets, risk management and the trading system that the trader will apply. If the trader carries out a trading plan with super strict discipline, then the trader will be able to minimize errors that occur in trading, and by itself will minimize risk.
Trader's emotions will usually overwhelm the trader when the trader's money is in danger. Often people will make irrational decisions at times like this. Good traders should not make irrational decisions like this. A good trading plan will keep traders from making bad decisions in difficult times. With a good trading plan, every decision that comes out has been carefully calculated, so traders will avoid making rash decisions in difficult situations. The only thing that needs to be done is stick to the original plan, namely the trading plan. Here's how to build a trading plan:
Know Your Character
The first step needed to build a trading plan is to recognize the character of the trader himself. The basis of the trading plan is the character of the trader himself because it is the trader who will carry out the trading plan. By knowing the personal character of the trader, the trader will know what kind of trader this trader is. This is called a trader profile. If the trader already knows the trader's profile as a trader, then the trader will be able to find out what kind of trading method suits the trader's character. Strategies, systems, or methods that do not match the trader's character will actually reduce the trader's chances of success.
Set Goal
Set trader goals as a trader. It would be better if the trader also has a certain motivation that can spur enthusiasm and strengthen the trader's commitment. One will not be successful as a trader if the trader does not have a serious commitment. Traders will be quickly crushed by the market. Remember that a trader's goal of trading is of course to earn a consistent profit. If the trader's goal of trading is just for fun testing his guts, then that goal will not work together with the goal of achieving that consistent profit.
At certain times, traders may enjoy stressful times when traders' transactions are swayed by the market. But believe me, traders will find it difficult to be able to show that happy face when the trader's account collapses by the market.
Set Target
It is recommended that traders set a trader's profit target with explicit and specific numbers. For example per $100 per day, $1,000 per month, 20% per month, 50% per month and so on. Clear targets in turn will help traders determine the strategy that traders will implement. Traders will also be able to evaluate the progress of a trader's trading, whether reversed or vice versa.
Define Strategy
This strategy is related to risk management, money management and trading system. In the previous chapter, traders have learned about this trading system. For example, in a trading strategy, the amount of funds used for each transaction is determined, the amount of risk for each transaction, the target to be achieved and what trading signals are used.
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