Homework Questions

Theory
1.) Define and Explain in detail in your own words, what is a "Trading Plan"?
2.) Explain in your own words why it is essential in this profession to have a "Trading Plan"?
3.) Explain and define in detail each of the fundamental elements of a "Trading Plan"
Practice (Remember to use your own images and put your username)
Build a “Trading Plan” and cover all the basic elements discussed in the class. For this, you should NOT take the examples that I put in my class (Including the example amounts), use your own examples and your own images to make said plan, you must also base this "Trading Plan" as if you were operating on the platform of " Binance ”, taking into account that the minimum amount of exchange or investment is $ 10.

1.) Define and Explain in detail in your own words, what is a "Trading Plan"?

Trading

I'm basic terms trading can be defined as a general economic activity which involves he buying and selling of assets/commodities or services in order to make profits.
In the digital world, trading can be defined as the process of speculating the price movement of a digital asset especially crypto, in order to buy and sell that asset or to exchange them for other valuable assets in order to make profits.

Plan

A plan is a set down detailed analysis or proposal on how to go about something or a guide to help a person achieve a certain goal.

Trading Plan

Now it all comes together.
It is a known fact that making money is all about risks, which brings the popular saying; "Take the risk and join the billionars"
And when it comes to trading this risks are high especially when it has to do digital assets and how volatile their values can be, but it can managed with a trading plan.
A trading plan is a detailed analysis of the digital markets and assets. A trading plan directs a trader on what should be done, when and how it should be done, at specific times in while trading. It defines a person's trade and helps to minimize loss and eliminate some trading mistakes. A good trading plan will help a trader quickly understand the digital market and it will also help him achieve his set down goals and reach his personal expectations in no time. The trading plan contains some analysed risk management rules and trading system.

The trading plan is all about setting out a specific amount a trader is willing to risk or loose and the amount of additional profit he/she is satisfied with during a trading section or day.

2.) Explain in your own words why it is essential in this profession to have a "Trading Plan"?

There is a popular quote by Benjamin Franklin; "If you fail to plan, you plan to fail". The importance of a trading plan cannot be over emphasized because it is what determinew how successful a trader will be in the trading business.
A person trading in the digital market withouta plan should be ready toake losses especially those that will drain them emotionally, he may not know how to handle the fear and greed index or the Stop loss and Take profit index.
So a trader who wants to manage his risks and make good profits should build a good trading plan, because it will also guide him/her on how and when to enter and exit the market.
In general a trading will help a trader to;
• Be able to recognize his set out goals.
• Know when and in what direction to take a position.
• To properly organize his market analysis and trading activities.
• Properly know how to manage emotions ranging from fear, greed or a heartbreaking loss, and to also let him/her know how to manage risks once a position is entered.

3.) Explain and define in detail each of the fundamental elements of a "Trading Plan".

1.) Capital Management:

I think this is a very important component of a trading plan. The business of trading is all about turning up your capital to make profits and how the capital is managed and preserved is what determines how much profit a trader can make.

A trader who his capital properly will have his capital last long for him, thereby ensuring his success and longetivity in the game of trade. One of the greatest determinant of a person in trade is the capital is managed, because capital management determines the size of losses and profits.

2.) Risk Management:

This can be referred to as how many times a trader should participate in market activities in a single day. It also refers to the risks a trader is capable of handling in one trading day.

With risk management, a trader will be able to minimize the losses he/she makes in a day , with risk management he/she will know when to exit the market know how to avoid certain mistakes. A trader with a good risk management plan is likely to achieve very minimum losses with large profits.

3.) Trading psychology:

Psychology refers to the state of well being of the human mind, it involves a person's feelings, emotions and thoughts and this has a great role to play during trade as it can lead to losses or gains. A trader who let's his psychology rule him while making trades will likely not go far in the game. A trader making great profits may get too excited and loss focus, this may cost him/her a costly mistake, also a trader making much losses may go into depression and quit digital trading for good or hurt him/herself.

However this can be handled with a good trading psychology plan, also we should not let our feelings or emotions influence our activities in the digital market, or let the results of trade influence our day to day activities. A good way to handle this is by keeping proper records, finding out or mood for different trade results and how to handle it.

4.) Planning and Control of Trading Account:

This allows us to develop a trading plan for a specified time, it is also important to note that how we plan adds to our trading experiences and sometimes it determines our financial condition.

After taking proper analysis and drafting out a trading the plan, the first is to do is write it down in a properly composed form, then the trader sets out to execute his/her laid down plans. It is also good if the trader writes down evaluation of his/her account in case of further adjustment, so as to ensure that he/she follows up with the plan.

Build a “Trading Plan” and cover all the basic elements discussed in the class. For this, you should NOT take the examples that I put in my class (Including the example amounts), use your own examples and your own images to make said plan, you must also base this "Trading Plan" as if you were operating on the platform of " Binance ”, taking into account that the minimum amount of exchange or investment is $ 10.

COLUMN 1

This columm contains the number of trading months.

COLUMN 2

This columm contains the capital which I start off with at the beginning of every month.

COLUMN 3

The column 3 contains the 1% percent loss or less which I have set as a limit. I exit the market once I've lost 1% of my capital.

COLUMN 4

This columm is where I filled in my profits of 3% my capital.

COLUMN 5

This column contains my total monthly profits, I trade 6 times a week. So it contains the sum of my 3% profits each day.

CAPITAL MANAGEMENT

I manage my capital by setting the percentage gain and loss I'm willing to make a day from my capital. I set the parameters to 1% loss and 3% gain a day and I believe it will help me a lot.

RISK MANAGEMENT

I do my best to manage my risks by deciding how much I'm willing to loose in a day and the profit I'm satisfied with for a day. I also make plans on how and when to enter and exit the market in order to avoid losing my capital.

MY TRADING RULES.

• I ensure the state of my mind's well being before starting any trade, in order to avoid losing concentration and losing money.

• I try my best to calm while trading in order to avoid making hasty decisions.

• I always endeavour to keep to my trading rules in regards to capital an risk management no matter the situation.

• I try to have a nap and shower before trading and I do not multi task the brain with other things in order to yield the best results.

• I promised myself not to trade for people using their capital, rather I'll give them a few tips I know.

Conclusion

This lesson have made it clear to us all that a trading plan is very essential while trading in the digital market, therefore I advise each person involving in trading to have a solid trading plan and he/she should follow his laid down rules. Also he/she should be good at capital and risk management, while maintaining a good psychology in trade in order to minimize loss and make more profit. A beginner should seek the councel of experts or experienced traders so as to properly learn and understand the digital market. Lastly, I give special regards to professor @lenomc21 for bringing us this nice lecture.