Successful Indices Trading Plan
In indices trading there is no single method or formula that is used for trading the stock indexes trading market successfully. The stock indices market requires traders to learn and acquire the skill required to trade the stock indexes trading market successfully. Indices traders need to learn how to analyze the stock indexes trading market movements. Indices traders then need to come up with a plan of how to come up with a way of combining this knowledge and the strategies they have learned so as to formulate their overall trading method.
By coming up with an effective trading plan your success will improve significantly. A indices trading plan will help you to effectively analyze the stock indexes trading market and know when the best time to open a trade is and when it is best to close the trade.
Before starting to trade the indices trading you must be prepared with a indices trading plan. Just like in business where all successful businesses start with a business plan also successful indices traders must start with a indices trading plan.
Sections of a Indices Trading Plan
The first section of a indices trading plan will specify the trading instruments that a indices trader will be trading. Indices traders should specify the trading instruments that are best suited for their trading method.
Before deciding the most suitable trading instrument to trade a indices trader will have taken time to test their stock indices trading strategy on various indices charts on a demo practice after which they will choose the trading instrument that produces most profitable results. The trader will then list this trading instrument on the trading plan as the trading instrument that they trade.
Chart Time Frame
The trader will also have to specify the chart time frame they will be using to trade indices with. For example a indices trader may find that the best chart time frame for their stock indexes trading system is the 15 minute chart time frame and therefore they will specify their chart time frame as the 15 minutes chart time frame.
The chart time frame that a indices trader chooses will depend on the type of trader they are. For day traders who have a lot of time to watch the charts they can choose the 5 minutes or 15 minutes chart time frame and trade with these charts. For swing traders who do not have a lot of time to watch the stock indexes trading market they can trade with the 1 hour indices chart time frame so that they can be able to follow the medium term trends that will last for a one or two days.
Indices scalpers on the other hand can trade with the 1 minute chart time frame and trade the short term market moves. These traders will make many trades during the day and just like day traders they will also have a lot of time during the day to watch stock indices market moves.
This section will specify the indices trading system that the indices trader will be using to trade the stock indexes trading market. This section will list the rules that a indices trader will follow when opening a buy or sell indices trade. It will also list the rule that a indices trader will follow when closing their trades - for example it will note the take profit levels as well as stop loss levels that a indices trader will set after they have opened a trade.
The trader will write if they will be using an indicator based stock indexes trading system to generate indices trading signals or the indices trader will write if they will be using support and resistance levels to open and close trades or any other method that the indices trader will be using for trading. For example a indices trader may specify that they will be using automated indices trading systems and they will write the parameters of the automated stock indexes trading robots on this section.
Before writing the indices trading system that a indices trader will be using, the indices trader will have back tested this stock indexes trading system on a demo practice account until the time that the stock indexes trading system is producing profitable trades on a consistent basis and after coming up with a profitable indices trading system the indices trader will then write down the stock indexes trading system on this section of their trading plan.
This section will specify the mindset that you will be following when trading so as to ensure that you become successful when trading.
Discipline – This will list that you will be disciplined enough to follow the rules of your stock indexes trading system and trading plan. Discipline will mean that you will be patient enough to wait for a trading signal from your indices trading system before opening a trade. This section will specify that you will only trade the signals that are generated by your stock indexes trading system and you will not second guess your stock indexes trading system and open trades not indicated by your stock indexes trading system.
Trade Without Emotions - when it comes to trading the stock indexes trading market you should not let the emotions of fear and greed control you when you’re trading. You should always trade based on the rule of your trading plan. Avoid becoming greedy and wanting more profit from the same trade instead of closing the trade at your take profit level.
Indices Trading Money Management
A indices trader must specify their indices trading money management rules that they will use when trading. For example a indices trader can specify that they will use a high risk: reward ratio which means they will place their take profit level at two times what they set their stop loss level. This will make their indices trading strategy more profitable in the long run because they stand to make more money from their winning trades and lose less money from their losing trades.