A cautious day trader will not risk more than they can afford to lose. The amount of capital that can be risked on each trade depends on the total size of the trading account and the level of experience. Many traders use a risk level of 1-3% as a benchmark, while beginners may prefer to start with 1% to get accustomed to the process.
The best plan is:
Having a solid understanding of the market you will be trading in is crucial to building a good trading plan. Having a strong knowledge base will help you confidently navigate the vast amount of information in the trading world and make better informed trading decisions.
Assessing market conditions, in short, means identifying strong trading signals that provide trading opportunities. To determine this, you must be able to analyze the market you have chosen.
There are two main ways to do this – fundamental analysis and technical analysis. The main difference between the two is the type of data used to predict future market movements.
Technical analysis relies on the past price movements of a financial instrument, while fundamental analysis studies the economic and financial factors that may affect markets in the future.
