The importance of a plan when you get into trading can’t be emphasized enough. Would you open any type of business without some sort of plan? If you open a McDonald’s franchise, do they say to you “Paint your walls red and yellow, sell some hamburgers and go make money!” ? I think not. This week’s newsletter will give you some suggestions for your own trading plan.
Perhaps the most important section of your trading plan will be your risk management parameters. These rules should include things like: How much of your account will you risk on any individual trade, how much will you risk on a daily basis, what will you do if you hit your daily loss limit (go to demo, come back tomorrow), number of positions you will take on at a time, etc? In the beginning of your trading career, we like to suggest risking .5% of your risk capital on an individual trade, 1-2% on a daily basis and trade 1 or 2 positions at a time.
…continue to read this article”How To Trade Pullbacks With 5 Key Technical Tools”
