During the investment we ought to make also a “Trading Plan”. In which we choose what products shall be traded, what indicator techniques is going to be used. Then, how much funding is going to be transacted, how many lots we can take, and just how the target gains and losses of our brave bear.
Within the plans we make it, then the set objective and sales target company and calculate the costs that must be spent where it should not exceed the proceeds that could benefit eventually.
With planning, we will be able to work in accordance with an obvious track and capable to control all means to attain the objective that we want. Trading plan can even help us in supervising the cost movements and take benefit of what we want and limit the losses that may take place.
However, you will find many other reasons but not least about why we ought to have a trading plan. That is associated with psychological problems of trading. If we have a plan within the trading and that we follow that plan, we hope to avoid the emotional turmoil which is the real enemy of the trader. We should be able to be quiet during the sessions that hot once trading hours and stay focused on the goal. For this to be done, we need to truly organized before entering the market. Our objective is to make earnings from investments, or if they fail, not to lose too significantly.
In the normal market movements, we should obtain a normal profit. We can determine how many points for taking profits after the cost moves in accordance with the predicted.
In a market that changes abnormally, which almost never occurs, we should get what is called an abnormal profit. This is one secret of success in trading.
Furthermore, we also should always limit losses on investments aren’t moving according to plan. We should also determine how many points will do the wrong position closing because the price has moved doesn’t match that predicted.
Nevertheless, it requires the strength of our desires, which is known as “will power,” to put into action what has been determined. Another form is that we should use what is known as “stop loss order”. Stop orders are placed at the same time that we make a new order. If we have a trading plan, we usually get sound advice if the market moves as we’ve anticipated.
What if the market moves don’t fit with what we anticipated? It’s time for you to make a decision whether to take benefit of still available, or to cut losses when possible. Right now things aren’t going well, when we are in a quandary, straight out of the market. If we had a compass in the desert and showed there was an oasis in the north, do not do something stupid to follow the mirage in the west. There isn’t any better move than to get out, if we are wrong in taking a position.
Have you made a trading plan? If that’s the case, follow it.
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Hassam 