Creating a well-balanced Trading Plan

When you get ready for a new business, you can plan for weeks or even months. Even the scientists are planning for years only to make their projects work. Without having a valid plan, no one can achieve their goals in life. You have to study hard and focus on the core element and only then it will be possible to create the perfect trading plan. Sadly, the novice Singaporean traders in the ETF market don’t have any plans. They don’t understand the importance of having a sound plan in trading. They are using some random techniques to execute new orders and losing money constantly.

Considering the fact that the majority of the retail traders are losing money, we will create a simple guide that will allow you to devise the perfect trading plan. Let’s see how we can create a well-balanced trading plan.

Find your risk tolerance level

The first thing you need to focus on your risk tolerance plan. If you trade the market with high risk and try to achieve huge profit, you will end up on the losing sides. Every trade unique and they have different risk tolerance levels. For instance, a pro trader might feel comfortable risking 1% on a certain stock but you may not feel the same. So, analyze your mentality and ask yourself how much money you are willing to risk on a certain stock. The amount of money that you place at stake should be considered as lost. This will give you the freedom to embrace losing trades. Without having the mentality to embrace the losing trades, no trader can become successful in this world. So, find your risk tolerance level and create your trading plan.

Develop a trading journal

The elite traders in the CFD trading industry always use a trading journal. By using a trading journal they keep things on track. If you want to make a consistent profit in the CFD trading industry, you should learn to keep track of the trades. Without keeping track of the trades, it will be hard to overcome the losses. People always think they know a lot about this market. But if you closely analyze the data, you will notice people don’t have strong skills to take the trade. They don’t have any journals so that they can assess their trading style. By using a trading journal, you will be able to create a trading plan because you can learn from your mistakes. Mistakes are a great source from which to learn new things. So, create a paper-based journal so that you can track your progress and fine-tune your trading method.

Perform a back-test

Once in while you should perform back-tests in your trading strategy. It will help you to create a well-balanced trading strategy. Without using a proper trading method, it will be very hard to overcome the losses in trading. People always think they know a lot about this market. But if you carefully observe the details of the market, you will know that trading is not as easy as it seems. The majority of the retail traders don’t even know how to back-test the trading method. You need to create a trading plan that will allow you to back-test on the market. It will help you to overcome the losses and make you a skilled trader.

Learn about the market environment

As a trader, you must learn about the market environment. Studying the market environment is the best way to develop your trading plan. Those who don’t have any valid plan, are always losing money since they don’t know the proper way to deal with the market environment. To be on the safe side, you should spend a few months in demo trading and it will help you to get an idea about the market. You can use that knowledge to develop your trading plan.