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Elements of a Successful Trading Plan 102
SELF DEVELOPMENT/METHODOLOGY/PSYCHOLOGY
Elements of a Successful Trading Plan 102
2. Risk Level
Managing a risk in trading is essential if a person wishes to make profitable investments. As a
trader, one cannot control the market but he/ she do have the capacity to change what can be
done as circumstances require. They need to adapt the changes as the market conditions evolve.
A person does not take a position and hopes the market acts in your favour. Managing trading
risk will be a key factor in an individual’s long term success as a trader. As the market, structure
changes, the risk profile of trade will also change.
Risk will vary at different points of a trade and needs to be managed in a manner, which is
consistent with the individual style of each trader. This will be dependent on each trader’s
personality and time frame. Assessing market conditions can be categorised into core areas
where one need to consider the risk profile in his/ her trade. This risk needs to be assessed also in
line with your trading objectives. Active traders will tend to add and take off risk for each new
swing in the market, whilst passive investors will ride minor retracements looking to achieve
larger reward targets. Following are some areas where risk can be managed throughout a trade as
well as what to look out for at these points that indicate that the risk is increasing;
• At Entry: Stop loss risk.
• Distance from Moving Average: Price exhaustion risk.
• “M” Pattern: Price retest failure risk.
• Candlestick Tails and Shadows: Price rejection risk.
• Period Close: Price rejection risk.
• Reducing Range: Trend momentum risk.
• Support or Resistance: Price level failure risk.
It is necessary that how an individual plan to address the risk management needs to be included
as a critical part of the trading plan in order to protect the invested capital and preserve the
profits. One need to have strategies in place for how he will deal with the different areas
throughout a trade and how he will know when risk is increasing to a point where action needs to
be taken either to protect profits or capital.
Follow your trading plan, Remain disciplined and keep learning :)
More elements will follow... Like, share, Comment and follow us to keep updated on our professional trading ideas and education :)
Elements of a Successful Trading Plan 102
2. Risk Level
Managing a risk in trading is essential if a person wishes to make profitable investments. As a
trader, one cannot control the market but he/ she do have the capacity to change what can be
done as circumstances require. They need to adapt the changes as the market conditions evolve.
A person does not take a position and hopes the market acts in your favour. Managing trading
risk will be a key factor in an individual’s long term success as a trader. As the market, structure
changes, the risk profile of trade will also change.
Risk will vary at different points of a trade and needs to be managed in a manner, which is
consistent with the individual style of each trader. This will be dependent on each trader’s
personality and time frame. Assessing market conditions can be categorised into core areas
where one need to consider the risk profile in his/ her trade. This risk needs to be assessed also in
line with your trading objectives. Active traders will tend to add and take off risk for each new
swing in the market, whilst passive investors will ride minor retracements looking to achieve
larger reward targets. Following are some areas where risk can be managed throughout a trade as
well as what to look out for at these points that indicate that the risk is increasing;
• At Entry: Stop loss risk.
• Distance from Moving Average: Price exhaustion risk.
• “M” Pattern: Price retest failure risk.
• Candlestick Tails and Shadows: Price rejection risk.
• Period Close: Price rejection risk.
• Reducing Range: Trend momentum risk.
• Support or Resistance: Price level failure risk.
It is necessary that how an individual plan to address the risk management needs to be included
as a critical part of the trading plan in order to protect the invested capital and preserve the
profits. One need to have strategies in place for how he will deal with the different areas
throughout a trade and how he will know when risk is increasing to a point where action needs to
be taken either to protect profits or capital.
Follow your trading plan, Remain disciplined and keep learning :)
More elements will follow... Like, share, Comment and follow us to keep updated on our professional trading ideas and education :)
Follow your Trading plan, Remain disciplined and keep learning !!
Please Follow, Like,Comment & Follow
Thank you for your support :)
This information is not a recommendation to buy or sell. It is to be used for educational purposes only!
Please Follow, Like,Comment & Follow
Thank you for your support :)
This information is not a recommendation to buy or sell. It is to be used for educational purposes only!
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