Developing a trading plan
An organized plan is necessary no matter which trading style will be pursued. It is an organized approach to execute chosen strategy based on your market analyses and outlook.
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There are three key components to any trading plan:
- determining position size
- deciding where to enter the position
- setting take-profit and take-loss levels.
Developing a plan and sticking to it is what some call trading discipline. It is a key to success and yet, it is so hard to practice by traders as human emotion take their toll, simply disrupting and distracting even the most carefully planned movements. To keep emotions at bay, it is good to follow these three steps:
- focus on the pips, not on dollars and cents
- remember that it is about making money, not about being right or wrong
- you are going to lose a number of trades at some point.