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How to Develop a Trading Plan

It’s so easy to feel overwhelmed by all the different methods and strategies that you could employ to help you trade better. Here at Khwezi Trade, we can’t tell you what strategy will suit you best, but we can tell you what will help you find your method: a trading plan.

Developing a trading plan goes further than entering a trade, spending some time watching the charts, exiting a trade, and taking home profits. Many factors play a part in both your performance as the trader, as well as how the markets perform and how every factor works together to create a trading experience, given a particular situation.

Starting your trading plan is all about having a framework from which to work that you know will help you trade better in any situation. We’ve set up a list of five things that you can add to your plan to get it started. From there, you can add points that you feel are important to include to help you on your trading journey.

1. Keep it simple

Trading isn’t about how complicated of a trading method you can master, or how intricate your knowledge of trading terms is. You’re not here to impress anyone; you’re here to achieve financial freedom through your own personal trading journey. Therefore, you need to find a strategy that works for you, and execute it with the knowledge that you can turn a profit and understand the process.

2. Do your research

This doesn’t necessarily mean hitting the books. Videos, tutorials, articles, and blogs like this one are all ways you can start expanding your knowledge of trading and understand why and how things happen. Start taking an interest in the stock market and why growth and drops happen. Through research into trading-related topics, lucrative opportunities can be identified, giving you the chance to access markets and trade with pairs that could mean very good returns.

3. Set realistic goals

Saying that you want to put in R10k and make back ten times that amount within a week may not be the most realistic goal for a trader only just beginning their journey. We cannot say this enough: trading is not a ‘get rich quick’ game. There is no way to take a gamble and expect to turn profits from very risky trades. Understanding the difference between risk and reward and setting a profit and loss goal per trade is also a way to make sure you stay within a certain ‘safe zone’  when trading.

4. Manage risk

Risk management is about knowing how far you are willing to allow a trade to go before it becomes too difficult for you to control and anticipate in what direction it could go. Know what risk management tools are available to you on your chosen platform. Remember to check out our MT4 platform for an easy and reliable platform to optimise your trading experience.

5. Psychological factors

You may not realise it, but your mood can be a direct influence on your trades. Negative emotions could lead to negative trades in that your assessment of risk could be off, and losses could lead to increased irritability and difficulty in controlling trades. Therefore it is important to enter trades with an open and fresh mind, and a positive attitude in every trading-related endeavour you take on.

Taking these factors into consideration are a great way to start your trading plan, and it’s important to customise your plan according to what your journey needs from you to do.

Check out some of our other blog posts for more tips and tricks of the trade. Happy Trading!