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Lesson 47

  1. Evaluate your market understanding

The market you wish to trade will have an impact on the specifics of your trading strategy.

This is so because, for example, a forex trading plan will differ from a stock trading plan.

Firstly, to begin with, assess your knowledge of asset classes and markets, and study everything you can in all ramifications about the one you wish to trade on. Then think about when the market opens and closes, how volatile it is, and how much you stand to lose or earn every point of price fluctuation. If these aspects aren’t to your liking, you may want to look for another market.

  1. Begin keeping a trade journal.

A trading plan must be followed up by a trading diary in order to be successful. You should keep track of your transactions in your trading journal so you can see what is working and what is not. You must include not just the technical specifics of the trade, such as the entry and exit points, but also the logic and emotions behind your trading actions. If you depart from your plan, make a note of why you did so and what happened as a result. The more information you have in your journal, the better.