[THE SHARP TRADER LESSON #4]: A Good Trader Must Have A Trading Plan
You Can Never Be Your Best At Trading Without A Trading Plan
THIS SBD GIFT IS FOR YOU
"He who fails to plan, plans to fail"
I have always loved this quote, and i have made it one of my favorite trading quotes simply because of the practicality of it. Truly in trading, this has never been truer. Great traders are great planners. To do well in trading, you must always plan. Therefore having a trading plan is a crucial tool in a trader's arsenal.
Your trading plan should be regularly updated as you learn from the market. You must build trading discipline by sticking to your trading plan. A trading plan tells you what you are to trade, why you are trading it, when you are to trade it, and how you are to trade it. It also shows your trading style, your personal expectations of the trade, your risk level, and your trading system. A really good trader usually has two or more trading systems in his trading plan
There are only two reasons why you may not be doing well in trading:
- There is a problem with your trading plan
- You are not following your trading plan
With trading, you must trade regularly, and follow a specific trading plan for every single trade, so you can record an overall profit on all your trades. When you discipline yourself to always follow your trading plan, you are sure to become a profitable trader.
The first thing to do in building a trading plan is to ask yourself the following questions. These questions if you will answer them honestly, will make it clearer what your trading profile is, and how it will shape your trading plan.
1. Why are you into cryptocurrency trading?
2. What are your trading goals?
Your trading goals should be specific, eg. "i want to make 1 bitcoin every month"
3. How much can you afford to lose in trading?
This is known as your risk capital. Do not start trading with any money you cannot afford to lose.
4. How much time can you dedicate to trading daily/weekly/monthly?
The time you can make available to trading, is what should determine your trading style, that is the kind of trader you are.
These questions should be answered in your trading journal (a trading journal is a book where you record every single activity you do, think and feel in your day to day trading activities)
What should be your daily activities before you start trading?
Having a basic set of activities you do before starting out a new trading day is very important. These are the tasks you need to do:
- Go over and review any trades you still have open
- Review all your previous days trades
- Get yourself up to speed with the market, prices of coins and the trading charts
- Follow cryptocurrency news and Identify any upcoming news that could cause price movements
- Prepare yourself for any trades you want to make for the day.
These activities will help you plan your trading day. So that you are not using your active trading time still figuring out the direction of the market.
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