A trading plan is a group of rules and recommendations that shape and define client trading behavior, taking in consideration financial goals, money management rules, risk management techniques and criteria for opening and closing positions.

How to develop your trading plan:

Analyze your current situation: See if you are ready to trade, you have enough time to check the signals without leaving anything behind. Find out what are your strengths and weakness prior to entering the trade.

Decide on your trading goals and write them down: Set realistic goals and write them down. Check continuously your financial goals and timeframes for reaching your goals one by one and be sure to control yourself when you made a successful trade, close the position. Do not get greedy.

Identify which market you know better: Choose a trading style according to your knowledge and expertise. The best market for you is the one you have more knowledge on. It would be foolish if you enter a market just because you heard it is profitable, but you do not have any knowledge at all about it. Be careful about trading times, different markets are available in different timeframes.

Know your limits and redefine them: When you open a position, be sure to put as much as you can afford. Do not go beyond you cannot afford. Again, do not get emotionally wrapped up in the trades, fund the account and stick to the initial balance.

Analyze the chart or count on the latest market updates and decide the moment to open a position and the direction (buy or sell).

Decide on your entry and exit points. In other words set your stop losses and take profits limits, while leaving room for changes yet not including yourself emotionally on the process.

Manage your emotions, manage your emotions, manage your emotions! Do not permit feelings cloud your cold logic. Treat the process as a business.

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