Components Of A Complete Trading Strategy For Success
- Filters- This include all the variables used in the analysis, pairs, timeframe, Indicators, EAs that the trader will be looking at in analyzing the market.
- Setup- What the trader is looking for in the filtered charts. It can be an alignment of certain indicators, a chart pattern at a key level etc
- Trigger- What is your signal to enter to enter the trade ?, What kind of entry type will you use.
- Stoploss- Where will you exit? Why there?
- Take profit- Where and why will you take profit?
- Trade management-Based on your stoploss, what lotsize will you use, How will you manage the trade if it goes in your favor and against you. When does your trading session ends.
- Market Scenarios and action plan- Name as many common and odd scenarios that may happen and what should be the most effective action plan to take when recognized. e.g. wrong market execution, wrong lot etc
Building Trade Plan
- Trading Objective : For example Main source of income
- Daily Check up: For example How do you feel mentaly, self evaluation-Is my environment set up for the trading session etc
- Checklist before taking the trade: Does the trade meet your parameters, is there a good risk to reward ratio(RRR). Check the setup, lot size, stoploss, take profit etc
- Checklist When in a trade: Includes the exit plan, locking profits, Scaling in, Market evolution and readjustment of SL and TP.
- Profit/Total pips
- Why did you enter the trade
- How did you feel prior and during the trade
- What should you do better next time
- How did I recover from loses etc
Session and Daily Recap
- Despite the outcome did I take trades according to my strategy
- Was my lotsize the correct one
- Did I get emotional and why?
- How do I feel now?
- What do inorder to do to feel better next time
Other components include targets, Daily to monthly reviews, Money management in a winning and in a losing trade, scaling in/out strategy.