Your trading plan
A trading plan means setting conditions for getting into and out of trades, establishing how much money to risk, and preparing a path with an expectation of profit.
Figure 6.4 – What is a trading plan?
You can base your trading plan on multiple factors and conditions; let’s see a few of them:
- Timeframe (position trading, swing trading, day trading)
- Market type (bull market, bear market, sideways market)
- Entry strategy (trade a breakout or a parallel channel without leverage)
- Exit condition (exit after two red candles or at channel top)
- Position size (2% risk)
- Expectations (weekly profitability > x% for day trading)
- Analysis (going over all trades one week after they closed and checking whether there’s something to improve)
A trading plan can be a lot of things.
It can be a sentence such as “a swing trade in a bull market, entering with a 2% risk every time BTC drops...
