If you want to come up with a winning trading plan that can help you achieve the best results in the market, follow these tips! Read on!
First of all, you need to know if you are really ready to start trading. You can ask Finance Brokerage Stocks yourself some questions such as whether you have tested your strategy via paper trading and if you have the confidence that it will work in live trading. You should also prepare yourself to follow signals without a bit of hesitation.
Bear in mind that trading in the markets is a give and take battle. Real professional traders are prepared and they take their profits from other traders who lack trading plans and therefore give away their money through mistakes.
Aside from the strategy, you Forex Broker List should also prepare your mental strength for the battle that is to come. If you are not emotionally and psychologically ready to take on the markets in a battle, you would be wiser to take a day-off, otherwise you risk losing your marbles.
This is almost sure to happen if you are angry, preoccupied, or even distracted from the task you have to do.
Many traders come up with a trading mantra that they tell themselves before each trading session. You can try and have one that can put you in the zone. Also, it’s wise to keep your trading area free of distractions.
Set the Risk Levels
Determine how much of your portfolio you should risk on any single trade. This will be based on your trading style and risk tolerance. It can range anywhere from around 1 percent to as much as 5 percent of your portfolio on a given trading day.
That means that if you lose that amount at any point in the day, you are going to get out and stay out of the markets. It’s better to ensure that you can fight another day when things don’t go your way.
Before you start and enter a trade, you should set realistic profit targets and risk/reward ratios. Set the minimum risk/reward ration that you will accept. Most traders will not take a trade if the potential profit is not at least three times greater than the risk.
You can set weekly, monthly, or annual profit goals in dollars or as percentage of your portfolio, and try to regularly re-assess them.
Do your Homework
Before the market kicks off, you should check what’s happening around you in terms of the financial markets. See if the overseas markets are up or down. Also, check index futures like the S&P 500 and NASDAQ 100 exchange-traded funds in the pre-market since these are a good way to gauge the market’s mood before the trading day opens.
Set Exit Rules
Most traders focus 90 percent of their effort finding good buy signals, but they pay very little attention to when and where to exit. Most of them cannot sell if they are down since they don’t want to take a loss.
Before you enter a trade, you should already know where the exits are. There are at least two for every trade. First, write down your stop loss if the trade goes against you. Then, find your profit target and when you get there, sell a portion of your position.