Ok so I'm looking for some help in creating my trading plan, what should I be thinking about when putting it together? what kind of things do I need to have in it? do I even need one at all?
Any help anyone can give would be very much appreciated as I'm feeling a little overwhelmed.
Definitely you need a trading plan!
With a sound trading plan you will be able to understand when to take profit , stop losses ,how much to trade and what other opportunities you can take advantage of. Most importantly it will tell you when to trade and when not to. Some things that you must include in your trading plan are :
• Decide on capital – Decide how much you want or you can invest in trading. Never risk more than you can afford to lose.
• Time commitment – Decide how much and which time you can devote to trading whether during the day , at work ,after work, evenings or at night.
• Determine your goals – You must have SMART goals . They must be specific, measurable,attainable, relevant and time bound.
• Risk – reward ratio – Next your plan must include how much risk you are willing to take for a specific investment. Calculate risk reward ratios for possible investment opportunities.
• Markets to trade – Which are the markets you can invest in say forex, commodities , stocks etc.
• Entry and Exit rules – Traders should never miss out on formulating rules for entry and exit . These rules may save you from a loss bearing trade.
• Maintain records – a trader must maintain records of the trades placed , the date time, profits and losses.