Having a good trading plan is what can make the difference between winning or losing when dealing with digital assets. Whether you are investing in the long term or short term, you need a solid strategy. Here is a step-by-step look at how you can formulate a plan when trading on Bitcoin Traders.
What is a trading plan?
A trading plan is a map that guides your approach. Every investor needs a strategy on how to navigate the crypto market. There are different techniques to be used. This is based on the trader’s temperament, attitude, goals, expertise and other factors.
A plan is important as it helps to keep you focused. Once you create a plan, avoid changing it, unless you are making small tweaks to improve it. Come up with a strategy only after carrying out careful research
Why do you need a plan?
It is possible to trade based on your gut. You could end up making a profit. However, it can be hard to replicate such a result due to the unpredictive nature of the crypto market. That is why it is essential to have a strategy. This gives you a better framework on which to trade. To be successful, you need to rely on well-thought-out plans. This will help you perform well consistently.
Advantages of having a plan
There are several benefits of having a strategic plan. These include:
- Reducing risk
- Even though it does not guarantee success, it significantly increases the chances of success.
- Guards against greed
Steps to creating a plan
There are several steps involved in coming up with a plan
Step 1-Do market research
Do thorough market research before you formulate your strategy. The truth is that you will not have time to constantly monitor the market. This is especially if you are a busy person with a tight schedule. Therefore, carry out comprehensive market research right from the start. Some key things to check out include market patterns, trends and risk.
Step 2-Determine your goals
Set your goals right from the outset. Your goals should be realistic, measurable and attainable. They should be achieved within a given time frame. You should have realistic profit targets before you start trading. You can set weekly, monthly or yearly goals. Assess regularly whether you have attained these goals.
Step 3- Establish a time for trading
Look at your daily routine and determine specific times that you can trade regularly. Therefore, you have to evaluate when and how much time you have to trade. Certain strategies take more time than others. So, weigh your options carefully.
Step 4-Determine your holding period
Once you buy, you need to hold your digital assets. How long you hold it depends on you. Some people will hold for a few minutes, hours or days. Others can hold for months or years. So, hold depending on your overall trading style.
Step 5-Gather insights
You have to track what you are doing. This will help to assess your performance in the market. This can be done by gathering analytics. The good thing about platforms like Bitcoin Traders is that such analytics are automatically collected for you in your trading account. This makes it easy to assess how you’re doing at a glance.
Step 6-Risk management
You will inevitably incur losses at some point in time. How you manage these losses matters. For example, you can opt to limit yourself to certain stop losses. You can also choose to limit trade to a given percentage of invested capital.
Step 7-Keep records
Keeping records will help you analyze your performance. You can check to see what you did to make a profit. More importantly, when you make a loss, you will know how and when it happened. This will prevent you from repeating the same mistake.
Step 8-Have an exit plan
Know when to exit the market. Learn to accept losses. Therefore, limit your losses. Accept it since this is part of trading and do not take things personally. Exiting at the right time will help limit the amount of loss incurred. No matter how complicated your exit plan is, a bot like Bitcoin Traders should automatically be able to execute it. Therefore, don’t worry about it being too complex.
Coming up with an effective crypto trading strategy is not easy. After going through the steps discussed above, you should be able to come up with a suitable plan. Once you set the plan, be careful not to deviate from it. Track it and observe whether you are accomplishing your desired goals or not.