One thing that is absolutely crucial to a sound trading plan is a trading plan. This trading plan, in simple terms, is a blueprint for trading your financial portfolio that is used to guide your trading decisions all the way through to the point of trading profit. This type of plan is crucial because it tells you exactly what and when to buy, sell and ultimately the exit from trading, just as if you were following a map. There are many different types of trading plans on the market today and a large number of them come with varying levels of difficulty and detail. It is essential that before you decide to use one, you research and find one that suits your trading style and level best.
There are various types of charting tools that you can use for planning purposes. One type of charting tool that is widely used is the bar chart. The bar chart has a lot of horizontal information on it such as the open, high, low, and closing price. Sometimes there are other horizontal bands such as the triangle and sometimes there are vertical bands such as the line. There are also other types of charts as well, including the line chart, candlestick chart, points and lines chart, points and figures chart, and panel charts. Of course, the most common trading plan is the candlestick chart.
A candlestick chart is one of the simplest trading planing tools that you can use. It is also one of the most popular. Candlesticks are simple bar charts that show price activity from a single candle. Most people have at least some experience with interpreting candles, as they have been used for hundreds of years for trading. Candlestick trading planing begins with the idea that price activity mirrors fundamental factors, so it is important that you learn to interpret the signals of a candlestick.
Before you begin trading, take some time to do research on a particular type of trading plan, then write down everything you know about that plan. Take your time to study these plans, and figure out how they work, what the support is, what the resistance is, and what type of plan you should use. Once you have a good idea of how to make sense of the charting tools, you should write down every single entry and exit point of each trading session in your trading plan. You may not be able to remember every single entry and exit, but if you have a spreadsheet you can fill in the details later.
You should think carefully about the type of plan you are going to use for trading. You may want to incorporate technical analysis into your trading plan. However, many traders find that candlestick charts are easier to understand. The problem is that trading plans are not written in stone. As new traders are added to a trading group, the members will often suggest new trading ideas that have become popular recently. This can make it difficult for you to incorporate new trading ideas into your trading plan, especially if you have written your trading plan in a text file, where you cannot make a copy for analysis.
Your trading plan will be useless unless you write it down. You may even be tempted to just type it out on a piece of paper and use that paper to refer back to in the future. However, trading plans are written in trading plans and you should always refer back to them when necessary. A trading plan is essentially the road map for your trading career, and it should be treated as such.