A plan is not a luxury, a plan is a necessity
Have a plan while shopping, have a detailed plan while trading
You need a plan because it will help you make a logic trading decision. A good trading plan will help you avoid the emotional decisions in the moment of uncertainty. The benefits are an easier trading process – trade according to your predefined conditions, planning in advance will save lots of troubles, cold-blooded decisions – you know how you should react towards certain market movements, so you won’t include emotions in the decision-making process, a strict trading discipline – trading needs learning day by day, discover why some opportunities bring profits and some not, continuous improvements – you will learn from past mistakes and improve your ability to judge market opportunities.
As any other activity, trading needs a plan. You need to create your plan and identify what type of trader you are, which are your weaknesses, so you know where you need the most work done. Successful traders have at least one plan, because they usually implement several plans together. Always write your decisions before executing them. Why? When you see your decisions written, you have the chance to overview and think about them twice. This way you will keep your attention on your decisions and focus on what is a priority. The secret is to write the plan and implement it, do not lose too much time in writing and sleeping over the plan. Write and execute it.
DISADVANTAGES OF TRADING
WITHOUT A PLAN
How to adapt a trading style to your goals?
The moment you decide what type of trader you are, you should start learning about trading online and doing research about trading methods, analysis, assets and strategies. Make learning a priority, and discover what new methods can you adapt to yourself, so you can maximize your profits. This way your plan is more effective when you create it based on your individual needs and expectations. Once you identify your needs, evaluate the efforts required to meet your needs in the timeframe you want. Time, learning and research should be a continuing investment. Research should reflect the latest global trends and financial events. Ask yourself if you want to be focused on fundamentals or technical methods of trading.
Strategy needs good analysis, fundamental and technical ones. First, you need to learn how you can perform these two analyses, what tools are needed to perform each of them. Technical analysis is based on chart reading and pattern identification. Fundamental analysis is based on event analysis, news and environmental events. Since it is not based on numbers, fundamental analysis is much more subjective. A large number of traders choose technical analysis, since it is based on math and probabilities which sounds more believable for them. The analysis can be either leading or lagging. Usually analysis gives a clue of where the market will go in the near future, up or down, but it usually does not show how much the market will move.
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