A lot of people seem to think that trading is nothing more just relying on luck to increase your account balance.
Actually, trading is more than just luck. It takes real skills to be able to make a considerable percentage of profit through trading. For successful traders, their wins can be attributed to a combination of learned skills, some luck, and a good trading plan to rely on.
Speaking of a trading plan, that’s one thing that many new traders actually have difficulty with. In today’s guide, I’ll be giving some important pointers that you need to consider when creating your very own trading plan.
What should you include in your trading plan?
Having a trading plan is very important, especially for beginner traders. In fact, trading without a plan is pretty much the same thing as shooting in complete darkness. There’s no way to know if you’re hitting your target, which means you’re practically relying on luck. And as we probably all know by now, luck is one of the most unreliable things in the world.
By having a good trading plan at your disposal, you’ll be able to properly aim your proverbial gun in order to hit your target bullseye. Of course, this will only happen if your plan has all the essential details. If it doesn’t cover all the important aspects of trading, then it won’t be very helpful at all.
That’s where this guide will come into play. In order to figure out what you should include in your trading plan, I’ve prepared a few questions for you.
How long will you use your trading plan?
The first question that you should answer is how long you’re planning to use your trading plan in the first place. Are you only going to use it for a day? Maybe a week? What about a month? You obviously can’t use a trading plan for too long because the information there should be constantly updated to fit your current situation.
Personally, my trading plans only last for a week. Most weeks, I update it with new information. If it’s working especially well, sometimes I can make it last as long as a whole month, though that’s not the norm for me.
My trading plan is also very detailed, which means it contains all the trades that I entered throughout the whole period of time that I’m using it. Luckily for me though, Binomo also offers a trading history feature. This feature allows me to have a quick glimpse of all my trades for the day. I immediately log this on my trading plan to be used as a reference for future trading days.
What’s your preferred trading strategy?
There are so many trading strategies out there that it’s impossible to just stick to one for the rest of your trading career. But of course, each trading plan should only have one trading strategy at a time, which means you should update it often if you want to change strategies.
In this guide, I’ll be using my preferred strategy, the TLS method plus the support/resistance and RSI indicator. I’ve also previously written a more detailed guide about this entitled How To Use The Trend Level Signal To Make $249 if you want to know more.
Why did I choose this strategy? Well, it’s very easy to implement, even for beginners.
Which assets do you plan to trade and in which markets?
Once you’ve determined the time period that you intend to use your trading plan, it’s now time to decide which assets you plan to trade and in which markets.
On Binomo, you’ve got a lot of choices to pick from. The platform offers currency pairs, financial derivatives, and cryptocurrencies. You can choose to trade in currency markets, derivatives markets, etc. Do keep in mind that you should only trade one asset in one market at a time to keep things simple.
After choosing which asset you want to trade, decide next when you want to trade them. Again, I also have a previously written guide entitled Guide To Choose The Perfect Trading Hours if you want to learn more about this specific topic.
What’s in your trading account?
Your trading account has three important parts.
The first part: the deposit amount. The number you decide here is what your total account balance will be. For instance, if you decide to deposit $100, then that means your account balance will be $100. You can use this money to trade different assets and make a profit from them. Your goal should be to never run out of this initial deposit. If it gets depleted, you should stop trading on the real account for a bit and create a new plan, one that will actually work this time.
The second part: the amount you invest in each trade. Even if you have $100 as your account balance, it doesn’t mean that you should trade all of it in one go. On Binomo, you can invest as little as $1 per trade. If you’re still new to this, investing just $1-$10 per trade is ideal.
The third part: your target profits. Specifying this amount is important as well because it helps you focus your efforts on actually reaching it. It also helps you come up with a more accurate and detailed trading plan. For instance, in the screenshot, you can see that my earnings are bound to reach 83% in this opinion. That could be my target profit for this trade.
What’s your plan B?
Not everything goes according to plan, and trading is no exception.
There are days when you seem to be on a winning streak, where every single trade you enter comes our profitable. When this happens, you’ll be able to reach your target profit much faster.
There are also days, however, when you seem to be on a losing streak. Keep in mind than when this happens, you have to know when to stop. Suffering from too many consecutive losses can instantly empty out your account balance.
In case something like the latter happens, what are you planning to do? What are your backups?
Think about it. Will you continue trading, or will you stop? The truth is, nobody can make that decision for you. Only you can decide whether you’re still willing to take a risk or if you’d rather rest and breathe. The only thing I can say here is that you should always protect your account balance. Sure, sometimes you’re on a roll and you just want to keep going. But whatever happens, don’t let it go lower than a certain amount.
Also, remember that emotions have no place in trading. Regardless if you’re on a winning streak or on a losing streak, you should never let your emotions dictate what you should do next. Emotion-driven trading is very dangerous, as it can lead you to make more mistakes than usual.
12 Questions To Help You Create Your Personal Trading Plan
- How long will I use my trading plan?
- What assets am I planning to trade and which markets am I planning to trade them in?
- Which trading strategy should I use?
- What should I set for the expiration time?
- What timeframes suit me best?
- What tools should I use in trading?
- What should be the size of my trading account?
- How many trades should I make per day?
- What’s the maximum number of losses I can take?
- What’s my target profit?
- What will I do if I can’t hit my targets?
- How am I planning to manage my money?
Obviously, the answers to these questions are very personal. The contents of your trading plan really depend on your individual style and preferences, so the most I can do is offer you these guide questions. Ultimately, it’s still you who’s going to develop it on your own.
That’s it for my guide to creating your own trading plan. These are just the basics, and you can, of course, make your plan as detailed as you want it to be. Even if you’re not completely sure yet how to make one, always make sure that you still try. A bad plan is always better than no plan at all because at least you can always improve a bad plan. With no plan, there’s absolutely nothing to improve. And sometimes, this alone can make or break your trading career.
If you want, you can also share your own trading plan in the comments below!
Good luck on your trading journey with Binomo!