How Traders should plan trades

By | June 11, 2014
  • A trader must have quantified entry signals that tell them when to enter where the probabilities of success are in their favor of being profitable.

 

  • A trader must build a robust trading system with a positive expectation model of a high winning percent of trades or one that will have bigger wins than losses long term.

 

  • A trader must have a concrete plan on where to exit a trade at a loss or where to take profits before they take the entry.

 

  • A trader must limit the capital at risk per trade to bring down their risk of ruin to zero. This depends on winning percentage, position sizing, and where stops are placed.

 

  • A trader must have a watch list of the vehicles that they will trade.

 

  • Each of us must understand and trade position sizes that keep the volume of our emotions and ego down to a manageable level.

 

  • We have to pick the time frame we will be trading off of and keep our trades with in our chosen boundaries.

 

  • We have to have good risk/reward set ups in our trading where we can be rewarded to make the risk worthwhile.

 

  • Our trading must be based on math, probabilities, logic, and reason, not opinions, emotions, or ego.

 

  • We need to have a successful trader that we can use as a model for our own success.

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