Affordable Indicators, Inc.
Make a Plan
Having a trading plan is key to becoming a successful trader. A plan lets you know when to trade, when to take profits or cut losses and helps you set P/L goals. Below are a few steps to creating your own trading plan, taken from ig.com.
1. Outline your motivation: What is your reasoning for wanting to trade? Why do you want to become a trader?
2. Decided how much time you can commit to trading: Figure out how much time you want to commit to trading. Are there certain hours you want to trade or avoid trading?
3. Define your goals: How much money do you realistically plan to make? How much would you have to profit a day, month or year to reach this goal?
4. Choose a risk-reward ratio: How much do you plan to risk going into a trade? How much are you willing to lose if the trades fails to go in your direction?
5. Decide how much capital you have for trading: How much money can you afford to add to your trading account? How badly would it hurt financially if you lost it all?
6. Assess your market knowledge: What strategy do you plan to use while trading? Make a detailed list of when you should take trades or when you should avoid them.
7. Start a trading diary: Keep track of your trades using trade journal software or excel. Write down any thoughts you have for each trade. Review your journal to find common trends.