🚨Create your trading strategy 💫 by reading this article 👇👇👇
Creating your own trading strategy requires a good understanding of the market, clear goals, and a commitment to implementing the plan. Here are the basic steps to creating an effective trading strategy:
1. Setting goals
Expected profit: How much do you want to earn from each trade?
Duration: Do you want to day trade, or trade long term?
Risk Management: How much are you willing to risk on each trade (e.g. 1-2% of your capital per trade)?
2. Choosing the right financial market
Cryptocurrencies.
Stocks.
Commodities (such as gold and oil).
Forex (foreign exchange).
Choose a market that you have knowledge about and see an opportunity to make profits in.
3. Market Analysis
(a) Technical analysis
Use technical indicators (RSI, MACD, Bollinger Bands, Fibonacci).
Identify support and resistance points.
Reading Japanese candlestick patterns to understand price action.
(b) Fundamental analysis
Follow economic news and financial reports.
Checking market-influencing factors (such as interest rate decisions or project updates in cryptocurrencies).
4. Determine entry and exit rules
Entry rules:
When would you buy? (For example: if the price breaks a strong resistance point with increased trading volume).
Exit rules:
When will you sell? (For example: when you make a 10% profit or when the price breaks a strong support point).
5. Risk Management
Use Stop Loss to protect capital.
Determine the risk/reward ratio (such as 1:2 or 1:3).
6. Experiment and evaluation
Demo Trading: Try the strategy on a demo account.
Performance values:
Does the strategy achieve the objectives?
Do you need adjustments based on the market?
7. Stick to the plan
Don't ignore your rules because of emotion.
Maintain strict capital management.
Record every trade in the trading log.
Evaluate your performance.
Extra tip: Start with small capital, and test your strategy well before increasing your investments.
