Most people panic when they see a change in the economy. .It is not wise to panic when these changes occurs because you cannot avoid economic factor and these go a long way to affect the stock markets these are basic steps you need to take while trading. Note the steps carefully.
1.How will you enter a trade?
The best entry point is putting trade that has low risk compared to much higher reward . You should draw out a trading plan.
. How will you exit a trade?
your trading plan plays an important role here, you could place an initial stops point for your trade especially at a point when the trend is weak; then apply a trailing stop techniques to protect your profits.
3.What type of orders will you use to enter and exit?
when entering , use a limit orders , but exit with market orders. Limit orders allows you to define your risk and reward clearly on the entry of a trade. When you need to get out, market orders allow immediate exit compared to the risk of missing your exit with a limit orders.
4.How much capital will you need to trade successfully?
This can be determined by the amount of money you have and as the capital keep on increasing by your profits expenses would be diminishing.
. What percentage of your capital will you invest in each trade?
The amount of capital use should be about 10% per trade or 5% . Some traders commit 20% . But your goal should be to keep portfolio risk per trade at less than 2% per trade, a 10% loss on that position would lead to a 2% loss on your portfolio.
6.How many position will I focus on at once?
I suggest you should not focus on more than five at a time because if they are too much you may lose focus of your trades.
What will your trading journal look like?
In your trading journal, you must note daily observations, especially whether you follow your trading plan strategies , you have to do post-trading analysis every month on your portfolio. This will enable you note where you are wrong and learn from your mistakes.
8.What is your position review process?
I suggest you use end of day routine to close your day. Review your trades and find out if you follow your plans and try to make comments on them.
9.What is your preparation process before trading?
you need time to prepare for the next day trading. You have to do a thorough analysis to enable you win your trades.
10.What broker will you use?
The cost of trading should not be an issue. Rather you should get a broker that execute your trades speedy enough and fair in execution.
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