Developing A Trading Plan – Part 1

Trading Preparation:

What I should be looking for & looking at

Part 1  | Part 2

Trading is not easy, it requires a lot of focused dedication.  It is easy to spend a lot of time looking at charts without gaining any useful information, at least for me it is.  I need to use my time more efficiently.

I must do my post market homework in an efficient formatted way, otherwise I am wasting time not making use of information on the charts and tools used.

I must have a system for pre-market analysis otherwise executing trades during the live market is just guessing and hoping to be right, or worse gambling without regard to un-calculated risk exposure.

I need to develop a better routine to post market review and pre-market preparation.  Just looking at the charts, marking it up with levels and reference points is not enough.  I need to have a consistent method and reason for choosing levels and selecting key reference points.  If I cannot explain why I select these areas and their relevance then I am just wasting time.  Moreover, explaining what happened alone without hypothesizing how it will affect future activity adds no value to me finding and executing trades.

The purpose of me trading and doing all of this is to grow my account and earn an income.  I must become more structured.  I can only achieve this through better more efficient post market homework and pre-market preparation.

First: Post market homework

After the market has closed all accessible information is known, this should be the easy part.  Here I am explaining what happened and why it happened.  It’s hindsight analysis but important for me to understand the context of the day.  For example, why did sellers sell the high and buyers buy the low based off the tolls I use.  The below chart discusses the logic of what happened in hindsight.

 

 

In the above chart, I purposely leave out the price and symbol.  It does not matter what it is, price behaves and gets the same reaction.

Part 2

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