The Importance of Having a Trading Plan !
Being able to anticipate the price movement direction accurately and be on the money at the maturity time is just 50% of the equation to get profits from trading binary options. Having a trading plan in which your strategies, goal setting, risk and money management are detailed explained is the other 50% of the equation to maximize your trading profits and minimize your risk to lose money, you have to stick to your trading plan and follow it to the letter.
What is a Trading Plan?
A trading plan is a financial tool, in which you by yourself or with the help of an expert financial adviser, write down step by step your guidelines for your trading strategy. How you will invest your money daily, weekly and monthly, you preset the best enter and exit trading time, the maximum amount of money you want to invest and risk, and keep a record of each trade you have done, paying considerable attention to the profits and losses you might have.
How to make a perfect trading plan ?
- Select the strategies, which you understand the most, and you feel comfortable following for each trade. The strategy has to be followed during the whole trading time for an asset.
- Establish the time frames for trading binary options and respect it. Trading at different times frames should only be done after you mastered the basics strategies and technical analysis and for forex or few assets.
- Choose the right indicators and learn to identify the market patterns which you will follow as trading guides
- Preset the enter and exit trading points. Simultaneously, create an emergency exit point if you misread the market signals or fail to anticipate the price movement direction to minimize losses.
- Set the maximum amount of money you want to invest per day, week, or month. Set an emergency figure at which you will stop trading for the day or week if your losses reached it.
- Record everything; you have to register the money invested, signals read, indicators values, and your winning rate, to corroborate that your strategy is right, and your plan is well written. If you losing rate is higher than 35%, you must to reconsider it and make the proper corrections.
- Establish a money management plan and follow it.
- Trade only the assets for which you have studied and reviewed. Anticipate the price movement depend on pattern identification, not in foreseen the future or guessing its movement.
- Once you have created your investment plan, you must follow it consistently. It is paramount to maximize your profits and reduce your losing risk.
The Importance of Having a Trading Plan
·You will be in control of the trading; it may help you to keep a cool head and erase the emotional disturbances, which can blur your vision at the moment and produces money loses.
·You will follow your strategy and maximize your winning odds. Stick to the plan no matter what, self-discipline is needed to be a successful trader.
·Clear guidelines the importance of having a trading plan is to establish all the trading guidelines accurately and eliminate any need for guessing or speculation. You must stick to the trading plan.