Plan & Perform

If you plan and perform, you are bound to be successful. So I thought why not plan for my trading too. And I have found some six simple but essential things to keep in mind for building a perfect trading plan.

1. Skill Assessment: Are you ready to trade? if not, try once? Have you tested the system on which you are going to trade, Trading in the markets is like a battle of give and take.
2. Mental Preparation: Be prepared mentally for both the sides of the coin. You may win or lose. Be prepared to feel the challenge ahead. If you are not emotionally and psychologically ready to trade the markets, take a day-off otherwise distracted you may be risking losing your shoes. If you are angry, preoccupied by some problem or otherwise distracted from the task at hand, then these are symptoms that make us realize that we should be away from trading for that day. The successful Market Mantra is staying cool while trading.
3. Set Risk Level: set your portfolio as to how much you should risk on any one trade. It can range anywhere from round 1% to 5% of your portfolio on a given trading day. That means if you lose, you should still be able to perform for the next day.
4. Set goals: Before you enter a trade, set some profit targets and risk or reward ratios. What is the minimum risk or reward you will accept? Many traders will not take a trade unless the profit is at least 3times greater than the risk. For ex: if our stop loss is a dollar loss per share, our goal should be a at least $3 profit.
5. Do your homework: Before you start trading, update yourself about the market conditions. Are the markets up or down? And whether they are going to perform well today or not? Etc
6. Clear your cache: There should be no problems arising while you are trading, because a minor distraction can cost you expensive. So check that your computer is working properly and there is no cache left it.