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Trading Plan

Sharefounders broker emphasizes that a trading plan is a road map, a ready-made technical guide, and a scenario for our behavior in the market. It exists so that we have a clear idea of what we are doing, why, and how.


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This article from Sharefounders broker will cover the following topics: What is a Trader's Trading Plan and how to make it.

At the initial stage of professional activity, a trader's trading plan is the first personal document that contributes to success. So, let's take a closer look at what this document consists of and how it is formed.

Why a trading plan is important.

Trading on stock and currency markets has its own rules and patterns. Contrary to popular misconception, this is not chaos, but a complex ordered system. Therefore, the most successful traders track their performance and create scenarios that display different market conditions.

A professional differs from an Amateur in that he trades according to a plan and even has several plans that work together. He sticks to them in spite of all the temptations that are contrary to the plan.

Sharefounders broker emphasizes that a trading plan is a road map, a ready-made technical guide, and a scenario for our behavior in the market. It exists so that we have a clear idea of what we are doing, why, and how.

A trader's plan is a description of sequential actions and the psychological part, which may include motivation and goals, behavior, and ways to deal with negative situations.

A trading plan can be simple or complex. The trader independently sets the framework of a particular behavior, as well as the rules of trading. Too simple a plan is not enough to successfully implement key rules and strategies in the trading process.

Sharefounders broker does not advise you to stick to a complex plan, because it is very difficult. Therefore, it is necessary to develop a neutral version, so that it does not take much time, but it is detailed enough for self-analysis.

The main objective of the trading plan is to keep the trader calm and relaxed during the trading process, since all market analysis must be performed before the start of the trade, and not during it. This is the opinion of all professional traders.

Why do I need a trading plan?

If you look at the issue more broadly, a trading plan is needed for support in making smart decisions and determine the parameters of an ideal trade. A good trading plan will insure against emotional decisions in the midst of trading, despite any temptations.

The distribution of time is half the battle.

Sharefounders broker reminds you that the last thing a trader should do is constantly think about trading and the good opportunities that they are missing. It's really maddening. Checking trading charts and results every 10-30 minutes can quickly turn into a very ugly habit that doesn't help much. To avoid this problem, we include the daily schedule in the trading plan in advance.

Calm and control are our allies.

When trading in highly volatile markets, emotion control is a prerequisite. Our «trading mind» should always remain calm and relaxed. Trading with emotions is harmful and quickly drains the Deposit. Therefore, we completely ignore our emotions and desires during trading.

Strict adherence to short-term and long-term goals is a priority.

Think about what you want to achieve as a trader. Goals should be divided into short-term and long-term goals.

Analysis of all transactions in the trade journal is a mandatory condition.

The use of the trading journal is crucial. Entries in the log will allow you to evaluate the effectiveness of your trading strategy and make the necessary adjustments in time. There are many ways to do this. You can use screenshots of the trading chart after opening an order, print tables in Word, or write data manually. At the end of each month, you need to do a detailed analysis of the most successful and failed trades to identify your weaknesses and strengths and improve your trading skills.

Sharefounders broker summarizes the results.

A trading plan can really change the whole attitude to trading. In fact, it reverses the mentality, shifting priorities from the pursuit of quick money to becoming a professional in new business. When creating trading plans, we start working effectively and reliably ensure ourselves against «accidental» losses. Trading on an exchange consists of many factors that need constant monitoring. Therefore, following a trading plan is a vital part of this business.



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