Importance Of Crypto Trading Plan

What is a Trading Plan?

A trading plan constitutes all the possible strategies/outline which helps a trader to execute the trades in the right direction. It helps in better decision making about the trades.

Another way to define a trading plan is how a trader employ a trading system over a given period of time.

Why it is important?

A good trading plan is very necessary to make informed decisions in the market and most important is how you are executing the trading plan. Having knowledge but not executing properly in the right direction would never be profitable, and the second most important thing is consistency as it evaluates the success level of a trader.

Components of a trading plan

1. Trading strategies — It is a part of a trading plan and it constitutes backtesting your strategies so that you can decide the outcomes of trades. Backtesting on the historical data gives insights about the behaviour of the market. While conducting backtest always include necessary information like time frame, risk level, rules for opening and closing trades.
2. Trading Procedure — Its the most important part of a trading plan which constitutes when will you analyze the market? when will you evaluate your daily trades? when will you monitor the market so that you can make a decision of making a trade?
3. Emotionless trading — Don't be influenced by your own emotions, just throw your emotions out from the market and trade like a bot. Take a look on all the factors like charts and sentiments of the market and make decisions on the basis of that not what your heart says, that will set apart from 90% traders in the market.
   Don't be a sheep

4. Read Books — Read some books on money management and trading system principles. The books are not rich-quick schemes but it helps you to achieve financial freedom over time. The books will teach you how to budget your money and some wonderful ideas on building wealth.

5. Disciplined trading — Trade-in discipline, prepare yourself mentally, gain self-confidence these are also very much important while trading. If you prepare yourself mentally then you can basically tackle any tough situations. Loses and profits are a part of life but the most important thing is how you are preparing yourself to manage your reward and risk.

6. Record — Record your trades, track them, analyze what mistakes you have made, those should not be repeated.

So trading plan not only constitutes the trading knowledge but the idea is to prepare yourselves with knowledge and mentally to tackle any situation. A good trading plan is necessary to make informed decisions and to cut the loses.

What do you think about the trading plan? let us know in the comment section!

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