How to Make a Profitable Trading Plan?

A trading plan is an ultimate tool for your trading decisions. It includes your decisions before and after a trade. A trading plan helps you to decide when and where to trade. You should have your specific personal trading plan.

A good trading plan must include:

Your goals from a trade

your attitude about risk management

your current capital to invest

your risk management rules

the markets you want to trade in

your strategies

your transaction records


Why do you need a trading plan?

A trading plan helps you to make more rational decisions, also it helps you to avoid emotion while trading.


Trading plan advantages:

  1. It avoids emotion
  2. You can monitor your process
  3. It makes a better trading discipline
  4. You can detect your faults


How to make a trading plan?

We are not the same. Each one of us has our ability, character, and attitude. So as a trader, you should make your trading plan based on yourself. Here are some tips to make a profitable trading plan listed below.

  • Consider your skills
  • Before start trading, asks yourself this question:
  • What are your trading experiences?
  • Do you know the market you want to invest in completely?
  • Can you decide fast when to enter and when to exit?
  • Have you examined your strategy before?
  • If your answer to any of the questions above is negative, it is better to test your trading plan before using it.


Mental preparation

Mental health is one of the most important factors for a trader. Trading is one of the most stressful jobs, so it is important to be mentally prepared before a trade. If I haven’t started your day very well, it is better not to trade in that day.

Do whatever that can improve your mental health, sleep early, and wake up early in the morning. Eat your breakfast

Meditation and exercise are also recommended.


Research and examine

Today, it is easy to find out what is going on in the world. You should follow the news and markets and upgrade your knowledge.


Set a goal

You should have weekly, monthly, and yearly plans and goals. For these goals, you should consider risks and profits.


Define your stop loss

Your stop loss depends on your risk ability. Professional traders consider between 1 and 5 percent as a stop loss. After defining stop loss, you should stick to your trading plan and be disciplined.


Choose your trading style

If you’re targeting long-term returns and don’t want to spend a lot of time opening and closing positions each day, for example, position or swing trading might be right for you. Or, if you plan to trade full-time but want to avoid paying overnight funds, you can consider day trading.


Find opportunities

Most traders find opportunities using either technical or fundamental analysis or a combination of the two. Now that you know how each option works, consider your preferred method of finding new positions.


Define rules for entry and exit points

By defining your rule for exit and entry, you can overcome your emotions in trading and do your trade base on your consequences.


Record your trades

Take a record of your all trades. You can check your strategies and analysis them. If you’re trading sum-up is negative, it shows you have had a mistake. Then you can find your mistakes and improve your strategies.

The data you need to record for each trade:

  • Entry point
  • Exit point
  • Stop loss
  • Take profit
  • A chart image when you enter and exit
  • Trading journal


The bottom line

Operating in the financial markets is not an easy task and success in these markets requires a lot of analytical knowledge and a successful trading strategy; It should be noted that just having a trading strategy cannot make your investment successful, but having a strategy is a hundred times better than not having it. In the capital market, you are like a soldier who has gone to war, and the trading strategy will be your armor and equipment, preparing you to face various war conditions.




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