📊How to make a trading strategy?
What helps the traders to be successful? That's right, their trading strategies. A trading strategy is a trader's plan for deciding whether or not to open a trade. The purpose of the strategy is to help the trader to make more successful trades, to analyze the mistakes and successes. At a time of uncertainty, these rules help to keep calm and make the right decision. Simply put, it's a set of filters that remove unnecessary noise from the charts and help you make right decision.
💹How to develop a trading strategy? Figure out what you want to trade and what you're best at. Do you like trading false breakouts? Let`s do it! Like to trade patterns? Perfect! Pick your best 20-30 possible trades from the past on the chart, and look for those patterns to repeat on the chart.
As soon as you get a chance to make a trade, remember the rules of your strategy, and if they all match, then do it.
💹What does a trading strategy consist of? This set of rules includes:
1️⃣ The tool you use (patterns, levels, indicators, waves, candlestick analysis, etc.). For example, a squeeze under the trend line, a false breakout of a level, the exit of the indicator into the oversold or overbought zone - all these trading tools can be used in your strategy.
2️⃣ Risk Management. How much money to use in 1 trade, risk per trade. This is a mandatory ingredient of any trading strategy. You can't be 100% right on every trade, so risking all of your capital is not advisable. The average win rate of traders is 50-60%. That means that 5-6 out of 10 trades will be successful - an excellent result. The other 4 trades will be either loss-making or break-even, so it is better to start with a small amount or virtual account on the crypto exchange. In the picture below, you can see what the risk-to-reward ratio and winrate should be.
If you have 50% of successful trades, then at least in each trade you should have RR 1:2 (for 1 risk you receive 2 rewards). To calculate your RR in TradingView, use the "Date and Price Range" section on the left side of the screen and choose "Long Positions" or "Short Position".
✅Example of a trading strategy.
Tools:
🔶false breakout of the key level;
🔶volume indicator.
Description: you marked a key level of $30420 on the chart. After the false breakout you noticed that a large volume appeared on the chart.
Target: the level of highs of 42K.
Risk to reward (RR) 1:5. Good for us? Let's look at the table! The win rate of this strategy is 50% and so RR profitable.
🚩Summary: by opening a trade with a risk of $10, you got $50.
💹Advice for beginners:
1. the trading strategy does not have to be yours. You can take the rules from another strategy and adapt them to you, make your own risk management, rules of entering the trade, in the end, how many trades you make per week or month.
2. start with something simple, like a channel trade and a volume indicator that will show you the reaction of a buyer or seller when it touches the channel boundary. Gradually add filters to remove noise from your charts and increase your win rate. For example, do not open a long on altcoins if Bitcoin is falling. Statistically, 99% of cryptocurrencies repeat Bitcoin's movements, so it is unlikely to be a good trade. Unless you know the secret information, or you have more than 8 years in trading, and you have enough experience.
3. make screenshots of your best and unsuccessful trades, analyze problems and fix them, and try to repeat the best trades more often. A trading journal is best for keeping statistics.
🏁Follow your plan and you will succeed. If you still have questions about how to create your trading strategy, write in the comments. Experienced traders, how did you create your own trading strategy? Share it with the beginners!
💻Friends, press the "like"👍 button, write comments and share with your friends - it will be the best THANK YOU.
P.S. Personally, I open an entry if the price shows it according to my strategy.
Always do your analysis before making a trade.
💹How to develop a trading strategy? Figure out what you want to trade and what you're best at. Do you like trading false breakouts? Let`s do it! Like to trade patterns? Perfect! Pick your best 20-30 possible trades from the past on the chart, and look for those patterns to repeat on the chart.
As soon as you get a chance to make a trade, remember the rules of your strategy, and if they all match, then do it.
💹What does a trading strategy consist of? This set of rules includes:
1️⃣ The tool you use (patterns, levels, indicators, waves, candlestick analysis, etc.). For example, a squeeze under the trend line, a false breakout of a level, the exit of the indicator into the oversold or overbought zone - all these trading tools can be used in your strategy.
2️⃣ Risk Management. How much money to use in 1 trade, risk per trade. This is a mandatory ingredient of any trading strategy. You can't be 100% right on every trade, so risking all of your capital is not advisable. The average win rate of traders is 50-60%. That means that 5-6 out of 10 trades will be successful - an excellent result. The other 4 trades will be either loss-making or break-even, so it is better to start with a small amount or virtual account on the crypto exchange. In the picture below, you can see what the risk-to-reward ratio and winrate should be.
If you have 50% of successful trades, then at least in each trade you should have RR 1:2 (for 1 risk you receive 2 rewards). To calculate your RR in TradingView, use the "Date and Price Range" section on the left side of the screen and choose "Long Positions" or "Short Position".
✅Example of a trading strategy.
Tools:
🔶false breakout of the key level;
🔶volume indicator.
Description: you marked a key level of $30420 on the chart. After the false breakout you noticed that a large volume appeared on the chart.
Target: the level of highs of 42K.
Risk to reward (RR) 1:5. Good for us? Let's look at the table! The win rate of this strategy is 50% and so RR profitable.
🚩Summary: by opening a trade with a risk of $10, you got $50.
💹Advice for beginners:
1. the trading strategy does not have to be yours. You can take the rules from another strategy and adapt them to you, make your own risk management, rules of entering the trade, in the end, how many trades you make per week or month.
2. start with something simple, like a channel trade and a volume indicator that will show you the reaction of a buyer or seller when it touches the channel boundary. Gradually add filters to remove noise from your charts and increase your win rate. For example, do not open a long on altcoins if Bitcoin is falling. Statistically, 99% of cryptocurrencies repeat Bitcoin's movements, so it is unlikely to be a good trade. Unless you know the secret information, or you have more than 8 years in trading, and you have enough experience.
3. make screenshots of your best and unsuccessful trades, analyze problems and fix them, and try to repeat the best trades more often. A trading journal is best for keeping statistics.
🏁Follow your plan and you will succeed. If you still have questions about how to create your trading strategy, write in the comments. Experienced traders, how did you create your own trading strategy? Share it with the beginners!
💻Friends, press the "like"👍 button, write comments and share with your friends - it will be the best THANK YOU.
P.S. Personally, I open an entry if the price shows it according to my strategy.
Always do your analysis before making a trade.
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