In the last post, I spoke about strategies. Once you have your strategies worked out, you need to develop a good Cryptocurrency Trading Plan.
You know what they say – Failing to Plan is Planning to Fail – This could not be more true when trading any market. A good, sound trading plan will help you out in all situations so you can make cool, calm, predetermined decisions when you need to. If you follow it, your trading plan will help you greatly – Plan your Trade & Trade your Plan.
What is a Trading Plan
First of all, let’s get this out of the way your strategy is NOT your trading plan. Your trading plan is much more than just your strategy. Your strategy forms a part of your overall trading plan. If you want to know about Strategies, look at my post on Crypto Currency Trading Strategy.
If you can’t write down your plan, you have not got one. A trading plan is basically what it says, and it should be a plan of How you are going to trade. It should be thorough and include ALL details about your trading. I have mine written down as a word doc, I open mine up, and I read through it every day before I start Trading.
Why I need a Trading Plan
I will repeat it – Failing to Plan is Planning to Fail!
It really is that simple; trading is no different. Just like a sound business will have a good business plan you need to have a written plan if you want to be successful. Your Plan will guide you and help you have a successful trading business.
You need to write down your goals and your rules related to your trading. All this stuff should be predetermined before you start trading. It is no good being in a trade and then trying to work out what you will do. A good plan will help guide you and help you make good, sound decisions in the heat of the trading moment.
If you don’t have a plan, you will fail. It really is that simple so Let’s look at what you should have in your plan.
What should be in my Trading Plan
Your strategy should be in your plan, but your strategy IS NOT your plan. It just forms a part of your plan.
I will go through what I have in my trading plan.
- Short Term Goals
- Just list what your short term goals are. It will be different for everyone. In my short term goals, one of the things I have listed is that I will continue to execute “flawless” trades following my rules 100%
- Longer-term goals
- Once again, this will be different for everyone, but a long term goal could be to become a full-time trader. You should also write down the WHY this would be important to you. Try to be specific; this is important stuff.
- Now, this is where you write your strategy down. I use three different strategies depending on market conditions. Just write down anything related to your strategy here. You could also put stuff as you will only trade the top 25 market cap tokens because they provide higher liquidity.
- Trade Mechanics
- This is where I detail my strategy a bit more. I will write down stuff like where I will place my stops and targets etc. I also have details of how I will use a trailing stop. You should be thorough here and write down all the scenarios you can think of that might happen in the markets, then you will be repaired and have a plan when/if it does happen.
- ALWAYS predefine your risk ALWAYS! This is the place where you write it down. I only ever risk between 1-2% of my trading bank on any one trade.
- Your plan should also include a procedure of how you will trade. You need to include things like the time you will trade, how you will record your trades when you review your trades etc. Just step it out like a schedule. Number 1 on my daily schedule is READ My RULES! Number 2 – I have written how I do my daily scan, keep stepping it out like this.
And This Too…
- Undesired Outcomes
- It does not matter how good you think you are; you WILL have trades go wrong. You need to have thought about this and have it written down what you will do when trades don’t go your way. For example, you might stop trading if you lose 3% in any one day. You can set weekly and monthly limit points as well. It is also important to write about how you will handle things after any of these limits are reached. You might have a break for 2 days before you start trading again. These are just example, you should come up with your own rules, but it is critical to write them down. You can always change them later on if they are not working.
- My Rules
- This is the place that I write my general rules down. For example, I only trade with the trend. If I am sick or not feeling right – Do NOT Trade. Never trade without a stop loss – EVER! You can write things like – Trade what you see, NOT what you think! I also have some quotes from Mark Douglas written down under my rules.
It is important to be detailed in your plan, so write it all down and review it regularly. Make changes if you need to but make sure you stick to your plan.
Why Do I Need to Follow my Plan
This one should be obvious, but I will say it again – Failing to Plan is Planning to Fail.
A good plan gives you an edge in the market, just like a good strategy. If you haven’t got an edge in the market, you are just gambling. A good plan will help your Trading Psychology and help you to make the right decisions in the market when you need to. There should be no big surprises because you have covered all scenarios and how you will deal with them. This way, you can approach these situations with confidence and make good decisions with no emotions involved.
Failing to Plan is Planning to Fail
I hope this post has given you an idea of writing your cryptocurrency trading plan and what you should have in it. If you have any more suggestions about trading plans or any questions related to trading plans, drop them in the box below and remember…..
Failing to Plan is Planning to Fail!
❗ DISCLAIMER: I am not a financial advisor. This is not financial advice. The content and material I provide on 2dsirecrypto.com is my opinion only and general in nature. Always do your own research before investing any money. You should always understand the risks involved in trading and investing and seek advice from licensed professionals before undertaking any investments of your own.