How to make a well-balanced trading plan

To trade successfully, a trader has to have a well-balanced trading plan. There is usually more than one way of trading in any market, and the key to success is finding out which method works best for you.

A trading plan can make the difference between whether a trade makes you money or not. The first step in creating a well-balanced trading plan is identifying your weaknesses as a trader and strengthening them before moving on to the strengths that you excel at.


The first step in developing a well-balanced trading plan is to take time to assess yourself as a trader. What are your strengths? What are your weaknesses? And how can you improve? Ask yourself questions like the following:

  • Have you developed good money management rules?
  • Do you stick to your rules, or do they vary with market conditions?
  • How often do you trade, and how much capital have you worked out that you need for each trade?
  • If nothing is working for me right now, what should I be doing differently, either fundamentally or technical-wise, to find something that works?

It may not always be possible to find a trading system that will work 100% of the time, but you can find something that works more often than it does not.

Make a trading plan.

Once you have completed your self-assessment, make sure that before you start making any trades, you have a well-thought-out plan on what those trades will be and when they will take place.

What markets do you want to trade? Which time frames work best for those markets? When do you expect these conditions to occur? Will this type of analysis only work with specific brokers or software? If so, which ones?

Once again, there is no right or wrong answer here as everyone has different needs and goals from their trading. However, the main thing here is that you are comfortable with the trading plan that you have come up with.

Risk management

Risk is a crucial factor in how well your trading business does, regardless if it is long term or scalping. There are two types of risk – systematic and unsystematic Risks. Systematic risks affect all assets regardless of market conditions, whereas unsystematic risks only affect specific assets depending on market conditions.

For example, during an economic crisis, government bond prices might rise because investors will want to invest their money into stable financial products rather than equities because there is uncertainty about future growth prospects due to the economic crisis.

Bond prices have risen for this reason, but stock prices might not have fallen, which means you would probably be better off trading stocks than bonds during an economic crisis. The main goal of risk management is to identify and take steps to minimise both unsystematic and systematic risks.

Money management

The next stage is to look at money management strategies which are very closely linked to risk management. Again, there is more than one style of money management, and that is up to you as a trader to decide which one works best for you.

In conclusion

You cannot start trading successfully overnight, taking things slowly and developing a well-balanced trading plan is an essential part of the journey. It should include your strengths and weaknesses as a trader, how much money you are willing to risk per trade, the timeframe you want to trade, the type of strategies you will use, etc.

It is also imperative to always remain focused throughout the day because if traders lose track of time, this will lead to sub-par decision making, which could cause them to lose their entire account in one fell swoop. Proper risk management is just as important as having an effective trading system because this allows users to protect their funds at all times. Check this page to see if your plan works.

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