As traders, we all want to improve our trading strategy and it’s accuracy. Some of you might simply struggle with choosing a good trading strategy.
The real problem is not in the strategy, but how you follow it.
You can master any trading strategy in 2019 with these 9 simple steps.
So let’s get started!
1. Choose your motive-Goal setting
Once you decide to start trading, write down the reason why you need to trade?
What are your objectives behind trading, how much money you want to make by trading every month?
If you don’t have a clear monthly objective, it’s really difficult to succeed with trading.
Best traders in this world are very clear with there objective i.e. what returns they want.
Stop choosing irrelevant objectives
If you are aiming for 100 % returns on your money than the stock market is not for you.
This is the biggest reason why traders make losses by day trading.
You will get 10 times or 20 times leverage on your invested capital, but you need to use it wisely.
Not sure about how much returns expectation you should keep from trading ??
This is what you need to do-Trade your plan with 100 % discipline and see what returns you are able to generate.
By being consistent with your trade plan, you will figure out how much returns you should expect overtime.
2. How much Capital you want to use for trading-Decide it
Simply using all of your capital at once for trading is the biggest mistake.
You should use only the capital which you can afford to lose.
The reason behind saying this is to protect your entire capital by being blown up to zero due to a single mistake.
Many traders just don’t come back for trading in their lifetime if they lose their entire capital.
Be smart and start your trading journey with just 2-5 percent of your available capital.
Once you start getting consistent profits, you can look to increase the capital.
3. Choose a trading strategy
There are more than 1350 trading strategies ( candlestick patterns and other lagging indicators).
Think it as this-if any 1 trading strategy worked well, why will so many other strategies even exist?
There is no 100 % profitable strategy out there.
It really doesn’t matter which trading strategy you are choosing.
How you follow that strategy really makes the difference.
4. Assign risk-reward ratio for your trading strategy
Choose a risk-reward ratio which chooses your trading style.
If you choose 1:1 risk-reward ratio, to be in net profits you need to be accurate by more than 60 % in your overall trades.
With a little higher
5. Follow a strict 90-day plan with the trading strategy you choose
How many of you out there, who are already trading have followed a single strategy for continuous 90 days ??
To decide how good a trading strategy is, you should at least follow a single strategy for 90 days.
You can also do backtesting for the strategy you choose.
This is why I don’t rely on backtesting data.
6.Log all your trades-Maintain statistics of your trades
You really need to track all your trades.
We call this logging trades.
And you can also download and use our free trading journal.
Trade logging is very important if you need statistics on how well you have performed.
This is the best way for you to improve your trading performance.
Next step will teach you how you can use your trade journal statistics.
7.Evaluate your trade statistics after 90 days
So once you have started logging your trades or maintain your trade journal, the next step is to use it.
Your 90 days of trade statistic will clearly indicate you how you are performing overall.
Check how many of your trades ended in profits and how many in losses.
If you are getting more than 40 % accuracy on your trading strategy, it is a really good strategy.
8.Improve your current strategy or choose a different strategy
If you are in a “no profit” and “in loss” situation after following a single trading strategy for 90 days, you seriously need to consider changing your current strategy.
You can make profits with trading strategies having just 30 %
With 1:3 risk reward, if you will three times out of ten you will be in overall profit.
If you lose 7 trade out of ten-you lost 7 points, but you will 3 trades with 3 points each i.e. 9 points.
So on average, you made 2 points profit.
This is how a good risk-reward ratio will help you.
If your current strategy is not profitable even after using a 1:3 risk reward setup, you should change your strategy.
Try different strategy with low capital.
If you are getting good profits and need to slightly improve your current trading strategies, you can add more parameters or studies to your existing strategy.
Or you can simply tweak settings of your current trading strategy.
For example, if you are are using a simple moving average strategy, you can change the average period from the default 10.
Or instead of using a simple moving average, you can use the exponential moving average.
Try and test out with different conditions with your current trading strategy.
Once you start getting consistent profits, continue with the current trading strategy.
9.Repeat the process from step 1 till you start getting consistent profits
You need to continuously follow above-mentioned steps and evaluate your trades on regular basis.
After following the above-mentioned steps, if you still feel that you are not improving with your trading, you should seriously look for other learning resources.
You can opt for a good mentor who can train you or attend a stock market training program like ours.
It is always better to learn first and than start trading or investing in stock markets.
Trading with a crystal clear plan is what the traders struggle with.
Implementing and consistently following your trade setups, will set you apart from other traders.
So be very serious in following your trade plan and follow it with a strict discipline.
What do you think is the most important thing for trading ?? Use the comment section below and let me know.