Despite the fact that without a plan you can not trade traders do it. Also, the newbie does not see the difference between the trading plan and the rules of the trading strategy. We will try to convince you once again of the importance of trade planning.
What to do before trading
Each trader before starting trading must have four pre-written documents in electronic or printed form:
Rules of trade strategy;
Conditions for opening a position;
Rules of money management;
Rules of trade strategy – Open / Close criteria, trading time, the timeframe used, trading asset (currency pair, raw materials, stock), expiration time and other information related to the transaction.
Conditions for opening a position. Conditions are specified separately for CALL (increase) and PUT (decrease) of options - it is recommended in the form of a checklist. If at least one condition is not met, the option is not opened.
Rules of money management – instructions for calculating the volume of opened option and actions for losses.
Trade plan – answers to a maximum of questions "what if.." in the process of trade. In most sources, the trading plan means full exact binary options strategy: the terms of the transaction, money management, etc. In our opinion, this is not very correct and "all in one place" information will not allow paying due attention to each element of the plan.
What's in the trade plan?
The required elements of any trading plan are listed with examples. Do not forget that these are only examples, for each trader they will be individual based on the strategy, their views on the maximum risk and the market as a whole.
Actions in force majeure
It is necessary to describe in detail and take in advance measures in case of a critical situation: no electricity or internet, software failure, etc.
Basic set in case of force majeure: in addition to the main computer should be a backup laptop, tablet or smartphone with the necessary software and 4/5G-modem, VPS-server, a list of the nearest free Wi-Fi points where you can quickly access the Internet.
Profit and loss control
In addition to money management parameters, it determines what to do with different profit values: large, medium, small. Separate actions for several losing trades in a row! The section is individual, depends on the style of trading and the values of maximum risk.
«After a profit of $ 50 or three consecutive successful transactions and the absence of unprofitable ones, we don’t trade». Note that $ 50 is a limit, not a GOAL that must be achieved at all costs. Any profit GOALS eventually lead to the loss of the deposit.
«After 5 losing trades in a row or loss of 20% deposit break for at least two days to analyze the situation»
«If the profit is 10% of the deposit, no more trading this week and see how binary options signals work» etc.
When you can’t trade
Under what conditions of trade there is no: after a sleepless night, in a sick state, depressed or very optimistic, etc.
Conditions must always be observed and not try to deceive yourself. This will only lead to losses, brainwork differs from physical - constantly to work at a limit it will not turn out.
Conditions for choosing a trading strategy
When using multiple trading strategies of binary options, specify under what conditions they apply.
«If the last two days the market is trending, strategy X is used, if the side market (flat) is strategy Y»;
«The moment of the opening is determined by binary option bot, and then the transaction is controlled according to strategy Z».
What information and from what source will be used for market analysis.
«In the evening, according to the economic calendar, a list of important news is determined for tomorrow. Options do not open if there is no expiration at the time of the news release, as well as half an hour before and after it».
«Non-Farm Payrolls data will be published tomorrow - options open only on this news».
«All found graphic figures are checked by oscillators and external Analytics», etc.
Short and long term trading tasks
Always remember why you started binary options. It helps to return to reality (why open ten binary options signals a day when the planned 10-20% per month has already been earned) and to find the strength to continue in times of failure.
«My goal is to make a profit of 5% per month and this is not the main job. There is no need to trade all signals, and will open only the strongest and longest-term trades».
«Trading is the main job; you need to constantly increase the size of the deposit and profit by 3-5% monthly».
«A binary option for me is a source of adrenaline. I understand the risk and deposit this amount, which is not a pity to lose».
Other on your choice
Favourite quote or rule "don't open the chart more than three times a day," "don't trade when it's raining in the morning", etc. Write everything that will help you tune in to trading, even if it is a sign of superstition. Trading is a difficult thing and any little thing can help or bring out of normal condition. Always keep the trading plan in front of you in paper form. And always follow it thinking how binary options signals work.