This article does not relate directly to our money management course. Nevertheless, it will be useful for every trader, especially beginners, to learn that one can manage the risks by means of a proper preparation for the trading session.
A good trader perfectly understands the connection between the preparation for the session and the trading account balance as soon as it has been completed. The quality of transactions depends on how thoroughly you have analyzed the market condition.
You will agree that a person steps very hesitantly in the darkness, trying to find tangible support around. There is a similar thing about in trading.
Market never forgives weakness
If we do not take the news into account, as well as new trends and the expected publications of important economic statistics, then we take the risk of getting into a situation of complete misunderstanding of the market.
Experienced traders will say that it will be better not to trade at such moments. But beginners might get under the market “wheels’ that do not forgive the lack of arrangements.
We will briefly tell you below about the system of preparation for the trading session. Note that this is not an independent strategy, but only a tool that can increase your chances of earning today.
Don’t act on impulse
Let’s imagine a typical situation: you open a trading terminal, look at the charts of your favorite assets and prepare your workplace. For example, you analyze the situation using technical analysis tools.
It seems that everything is fine, you are taking the right steps. But suddenly you come across a very attractive deal. Your indicators yell that you need to enter into a transaction. It is very difficult not to succumb to such temptation, and you … start trading.
However, it is premature to complete the stage of preparation in such a situation. Remember that preparing for a trading day is an independent stage of a trading session that does not involve carrying out transactions.
The longer, the better
At the preparation stage try to concentrate only on the analysis and personal trading planning. This analytical component of a trader’s work must be separated from the very process of trading.
By its result, you should answer the following questions with confidence:
1. What important news will be released today?
2. What trading strategy will I use?
3. Which asset should I pay more attention to (maybe bitcoin shows the strongest trend, thereby this situation is the most suitable for trading)?
4. What trends prevail in the market (for example, the Japanese yen strengthens against all currencies)?
Such preparation for the trading day will save you from indecisiveness and misunderstanding of the market. As a rule, this stage of the working day does not take more than 20-30 minutes.
We would like to say that it takes experienced traders less time, but in practice things are quite different. In their striving for perfection, professional market participants can devote even more time for preparation than for the process of trading.