Most new traders begin trading without a trading plan. This is quite often a recipe for disaster. Champions do not win the race without proper practice and planning. Trading is no different. In order to succeed, practice and planning are required.
For example, someone new to trading binary options needs to learn the platform. How can they manipulate the chart? What technical analysis indicators are in the platform? How do they enter orders? How do they place profit targets? Even the most experienced trader will fail if they do not take the time to learn how to maneuver the platform and enter orders.
If they are a new trader, then they typically need to begin at the beginning stages. Which type of price bar makes sense to them – candlesticks or the western style open, high, low and close? What does a price reversal bar or a pivot bar look like? Learning these simple price bar concepts allows the trader to incorporate leading price action with other technical analysis.
The next step is formulating what they learn into a written trading plan. The trading plan would identify:
- Markets to trade
- Timeframes to trade
- Expirations to use
- Entry criteria
- Exit criteria for profit or to minimize losses
By writing out the trading plan, the trader takes the time to develop his thoughts on markets, expirations, entries and exits into a formal written plan. A written plan also allows traders to measure their performance and discipline — which are all key ingredients into becoming a successful trader.