For a novice trader, if you follow the example of another trader or trading following the way of other people who you think is more senior than you. It was not wrong, but do not ever follow the advice of others implicitly.
Each trader can have different views on the market. Similarly, the way of thinking, risk tolerance, and a target, of course, different too. Just because someone has a trading method that they can do well and be successful, not necessarily the method is also suitable for you. In other words, doesn’t mean you can run a trading method is well and successfully too.
Have your own trading plan, which according to your character as a trader, and constantly updating its line with experience you learn the market. A wise man said: “If you fail to plan, then you have already planned to fail.”
Build a trading plan and run it well is closely associated with the discipline. But discipline is not enough. True, it is not enough. You have to have a super strict discipline. Yes, super tight! Has a super tight discipline is the most important characters of a successful trader.
Super strict discipline that you need to run a trading plan that you wake up earlier. The trading plan itself is a guide on what you should do, why, when and how you will do it. The trading plan covers your personality as a trader, personal goals, risk management and trading systems will apply.
If you are running a trading plan with discipline super tight, then you will be able to minimize errors that occurred in the trading and by itself would minimize the risk (note the word “minimize”. We did not use the word “eliminate”). Your emotions will usually dominate yourself when your money is in jeopardy. Often people will make irrational decisions in moments like that. A good trader is not allowed to make decisions that are irrational. Trading plan was good (and super tight discipline) will keep you from making a bad decision in difficult times.
With a good trading plan, every decision that comes out has-considered, so that you will avoid making rash decisions in a difficult situation. All you need to do is keep to the original plan, the trading plan. There is a sentence in English that can be described easily: “Stick to the plan!”
Why You Need a Trading Plan?
It was mentioned earlier that the trading plan will protect you from making rash decisions. In addition, the trading plan will make your trading much simpler than if you did not discount trading plan.
Have you used Google Map facility? With Google Maps, you can find out the location of a place. If you want to travel to these places, you can simply enter your current location or enter your destination. Then Google Map will give you the best route and directions to get to the location of your destination. You need to follow the direction so that you can minimize the risk of getting lost.
Your trading plan works similar route and directions were given the Google Map. He will show you where you are now and helps you to achieve your goal as a trader, namely a consistent profit.
Trading without a trading plan is almost as bad as traveling without knowing the direction and the destination location. Your goal is to reach trading consistent profit, but it is nonsense if you do not know how to achieve that goal. As a result, instead of obtaining a consistent profit, you are consistently destroying your trading account.
With the trading plan, you’ll know what you should do. You will soon know if it turns out you’re walking in the wrong direction. You will have a standard to measure your trading performance. You will always know what to do if you turned out to be ” the wrong direction”.
The trading plan also will help reduce the potential stress and emotional trading. Can heck, trading without a trading plan, but your trading style will be haphazard. Buy and sell signals based only on instinct or unclear. It does not trade name. That is tantamount to gambling.
Having a trading plan is no absolute guarantee that you will succeed. But at least, to have a trading plan you will be able to evaluate what is wrong with your trading if you fail.
In fact, due to failure in trading because they do not have a trading plan or execute a trading plan properly. This is the fact.
The majority of novice traders do not have a trading plan. Through this program, you will try to be a minority that can actually survive in the world of trading.
Know Your Character
The first step to that is needed to build a trading plan is to recognize your own character. Basic trading plan you are your own character because it is you who will run the trading plan. By knowing your personal character, then you will know what kind of trader you this. It is called the trader profile.
If you already know your profile as a trader, you will be able to know what kind of trading method that fits your character. Strategies, systems, or methods that do not fit with the character you would reduce your chances for success.
Set your goals as a trader. It would be better if you also have a certain motivation that could spur the spirit and strengthen your commitment. A person will not be successful as a trader if he is a serious commitment. He will quickly crush by the market.
Remember that your goal was trading course is to obtain a consistent profit. If your goals are trading just for fun to test your nerve, then the goal will not be able to walk together with the aim to achieve the consistent profit. At any given moment you may be enjoying periods of stressful when your transaction is swayed by the market. But believe me, you will be hard to be able to show “the face of fun” when your account following market collapsed. If indeed “a fun test your nerve” that you are looking for, please do “recreational” a kind of bungee jumping or parachuting, instead of trading.
We recommend that you set your profit targets with explicit and specific numbers. For example, $ 100 per day, $ 1,000 per month, 20% per month, 50% per month and so on. Clear targets, in turn, will help you determine which strategy you want to apply. You will be able to evaluate your trading development, whether improved or otherwise.
The trading world is a harsh world. Losses for the sake of losses will probably hit you. That’s why you need to set risk limits. The term is risk capital.
Risk capital is the amount of money in case of “lost” you are still going to feel fine. If in the course of your trading experience loss, the risk capital is the first time will leave your account. So, even though the money is gone, you will not lose your home and your family will be fine. Thus, the magnitude of this risk capital should be according to your ability.
Therefore, do not trade with money that was initially to be used to pay bills or pay for the purposes of everyday life. Imagine if the money is gone because you lose money trading, might you not eat later.
This strategy related to risk management, money management, and trading systems. In the previous chapter, you’ve learned about this trading system. Well, in the next chapter you will learn about money management and risk management so that your trading system can balance with the power of your capital.
For example, in a trading strategy set amount of funds used each time a transaction, the amount of risk for each transaction, the target to be achieved and what trading signal is used.