Preface:
In uncertain markets, the ability to accurately predict and respond to changes is critical to successful trading.
This article will explain how plans and trading plans can provide traders with confidence, avoid risks, and achieve long-term success in the market.
Stable returns.
1. Predicting the future
A plan is a strategy and decision made before a transaction begins, based on personal goals and market conditions.
The plan is relatively flexible and can be adjusted and optimized according to market conditions.
Below I will explain in detail with examples based on the market situation:
We need to know what the market is doing now
For example, we see in the BTC chart
The price is now moving in a range
There are three kinds of plans we can prepare for the interval
Type 1
The price is supported at the bottom of the range and you can go long
Type 2
The price cannot break through the range or falsely breaks through the upper limit of the range to trade short orders
Type 3
When the price breaks through this range, should we make a breakthrough or a long order after the breakthrough?
This is based on the current price trend, analyzing the several possible trends it will take.
No matter how the market price goes in the future, you have a reserve plan
You just need to see which price suits your plan.
This must also include your analysis of market trends.
And key positions and other issues
But this is not what we are going to talk about today.
I won’t go into detail.
Today I will only talk about the difference between reserve plans and trading plans
As we said above, the reserve plan is just a reserve plan.
But the price may change over time and may not match your plan.
At this time, you need to make adjustments. The plan is not dead, it needs to be changed.
For example:
As time goes by, the price has now broken through the range, right?
In line with the third plan mentioned above
At this time, those who are not good at making breakthrough orders
Waiting for the price to return to the upper track of the range
Expect and wait for the opportunity to go long
Even now I am starting to set up a trading plan
As the price moves, it is fine if you still expect to go long when you get here.
but
This K-line has fallen into this range
It is enough to explain the three contingency plans you have above.
All rejected
At this time, you can no longer treat the current market according to your original plan.
You need to re-analyze the latest price trend
I am setting up a new plan.
The price negates your original reserve plan
You need to change your mindset
Prices are dynamic, so should your thinking.
To summarize the plan:
Analyze the market and prepare for several possible future moves
You have a strategy to deal with any price trend
That is to say, think twice before walking
If the price rejects your reserve plan
According to the current market trend
Prepare new plans from scratch
To cope with the latest market situation
Next, let’s talk about the trading plan.
2. Importance of Trading Plan
The trading plan focuses more on the specific decisions of each transaction. It includes the entry point, stop loss point, take profit point, position size, etc., as well as the timing of the transaction and the trading strategy.
Let’s use the market as an example:
The market is bearish now
The key position has also been found
Now you just need to wait for the signal to enter the market
Now you need to set up a trading plan
For example:
1. When the next K-line is 2 points lower, I will go short
2. Where to place the stop loss
3. Where to place the stop profit (Is the profit-loss ratio high enough? If it is high, do it. If it is not high, don’t do it)
4. How much position to place (is it a loss-making position or a percentage of the position)
5. If the entry K amplitude is too large, should I place an order to enter the market or enter at a smaller level?
6. If the next K does not meet the trading plan, you should give up the transaction
7. If you enter the market and hit a stop loss, do you want to enter the market again for revenge?
8. Even when you reach your profit stop point, should you exit the market entirely or keep a portion of your position?
etc......
These are all things you need to think about before trading.
When you have planned all these, you just need to open an order when you are given a signal.
Execution of trading plan
As the market changes
Entry K meets the desired low 2
For example, if the position is 1000U, you can stop loss at 50U (which means if you have 1000U and you stop loss at 50U, you will lose 50).
A profit-loss ratio of 1:2 is a good deal
To summarize the trading plan:
Trading plans are usually made before trading is executed.
After setting up all the plans
As long as the price fits your plan
Profit and loss ratio
Execute the trading plan
And ensure the discipline and consistency of transactions in the long term
The above uses the market to analyze the difference between the plan and the trading plan.
I believe that traders who read this article carefully
Pay attention to plans and trading plans
And maintain the consistency of trading discipline over a long period of time
I believe that your future trading will not be too bad.
I am Coach Panda who is good at making complex issues simpler.
Wish you a smooth transaction