Plan de trading: 10 Steps to Building a Winning Trading Plan

That means that the distance between the entry point and stop-loss point, multiplied by the position size, can’t be more than 1% of the account balance. This rule governs position size, because position size is the only unknown and needs to be calculated. How much of your portfolio should you risk on one trade? This will depend on your trading style and tolerance for risk.

The amount of risk can vary, but should probably range from around 1% to 5% of your portfolio on a given trading day. That means if you lose that amount at any point in the day, you get out of the market and stay out. It’s better to take a break, and then fight another day, if things aren’t going your way. I became a self-made millionaire by the age of 21, trading thousands of Penny Stocks – yep you read that right, penny stocks. With fundamental analysis, you’ll read through the company’s news and review their earnings reports to gain insight as to who they are and what makes them tick. You’re looking for dirt like debt, news, potential catalysts — basically anything that could affect the value of the stock you’re considering.

However, you will give yourself the greatest chance by treating trading as a business, and that my trade-warrior friend, is what a trading plan is about. Part of the risk management process is determining whether correlated assets are allowed to be traded, and to what degree. For example, an investor must decide if they are allowed to take full positions in two stocks that move very similar. Doing so could result in double-risk if both hit the stop loss, but also double-profits if the targets are reached.

Economic indicators are what you’ll use to identify what’s going on in the greater economy or within a sector. This can help you identify companies or sectors that are hot right now and where you might have the most potential for profit. Stock indicators are one of the key ways to narrow down your choices for a potential trade.

How To Build Your Trading Plan

He has been a professional day and swing trader since 2005. Cory is an expert on stock, forex and futures price action trading strategies. Many traders have a market mantra they repeat before the day begins to get them ready. Additionally, your trading area should be free of distractions. Remember, this is a business and distractions can be costly.

There must be an underlying reason for your interest to trade the markets. Making money alone won’t cut it simply because it has to do more with the ‘how’ than the ‘why’. At the end of the day, the regular paycheck that trading forex can provide to the professional traders is just a by-product and means to your goal.

Trading plans can be a real game-changer for your trading. They can take you from a mentality where you’re chasing the brightest and shiniest stocks to the mindset of a calculated hunter where you’re slowly circling around potential profits. You might create a spreadsheet and develop a loose trading plan for the most promising potential trades. This will help you to be prepared when an opportune moment presents itself. In this tutorial, my aim was to give you a frame of reference to come up with your own ideas about what’s most important to you. Disregard having fixed rules and instead be constantly adaptive to the new insights you gain.

This can help you further refine your trading and potentially improve your success rate over time. With technical analysis, you’re using a trading platform like StocksToTrade to look at a stock’s specific price action over time. Because looking at the past can help you try to predict the future.

Review Trades & Keep A Journal

They can help you begin to see trends in the price, which can help key you in on potential price increases or decreases. While those things are all part of the process, without a trading plan, you aren’t preparing yourself to use all the information you’ve collected to your advantage. You also detail the specifics of the trade, including your entry and exit points and stop loss . In your plan, you make your intentions clear in terms of why you’ve decided to make the trade, why it’s a good idea, and what you hope to gain.

While it’s not easy to monitor hundreds of stocks at once, it’s accessible to keep track of five or so. You can screen and review these stocks on your list frequently. Once you’ve narrowed down your watchlist, you will at this point have a few strong contenders for a trade, and it’s a matter of watchful waiting. It boils down to waiting for the stocks to meet certain criteria. Often, you’ll be looking at volume, breakouts or breakdowns, or deviations from a moving average. Basically, a trading plan offers you the chance to take those sexy parts of trading and apply them intelligently.

Cómo crear un plan de trading exitoso

Computers don’t have to think or feel good to make a trade. When the trade goes the wrong way or hits a profit target, they exit. They don’t get angry at the market or feel invincible after making a few good trades.

Fundamental analysis is the research you perform to find out more about the business offering the stock in question. If you’ve ever Facebook-stalked someone, it’s like you’re doing that, but with companies instead of individuals. Technical indicators help you look at what’s going on with a specific stock.

The number of stocks on your watch list might range from just a few to hundreds, though I suggest that you keep it small, especially if you’re just getting started. It might be an Excel tab, it might be listed in a word document, or it could just be a handwritten note. © Millionaire Media, LLCA trading plan is pretty much just what it sounds like.

Trading Restrictions

By making a trading plan, you’re forced to consider both best and worst case scenarios, which can help you remain more tactical. Many traders ignore them in favor of more exciting aspects of trading, like chasing hot stocks and chart spikes, and looking at news and catalysts. The more mechanical and consistent your trading habits become, the greater the odds to be part of an elite group that makes money on a regular basis. Your trading plan should describe what your daily rituals are from the moment you come to your trading desk until you call it a day. There is no right or wrong when it comes to designing your plan. It is the progressive manifestation of that journey reflected in rules.

The actual ‘why’ must be one or a series of reasons that drive you. Here is the real challenge when creating a trading plan. It must be written with the greatest amount of detail yet keeping it as brief as possible, preferably to a single page. Perhaps not in the very beginning, but it should certainly be your aim as your skill sets improve and you gather more experience. Quite simply, because a plan is meant to be re-visited every single day ahead of your trading.