6 min read
If you ask an experienced trader what are the skills necessary to achieve success, the answer will undoubtedly be: discipline, consistency and, of course, perseverance. Although they are all necessary qualities, there is a skill that is often underestimated, and it is the ability to perform multiple tasks at the same time. Traders must be able to analyze the market, read the signals, conduct technical analysis – all this and more, sometimes in just a few seconds.
All the qualities mentioned above develop with time and training. If you are just starting out, it may be difficult to manage all aspects of trading. To keep track of everything that happens, it is highly recommended to use a preventive checklist. It will not only allow you to avoid losing important items or making mistakes before starting an operation, but will also help you to assess operations following closure.
Before following the steps in a checklist, it's important to remember that this is not a trading plan! A trading plan is the strategy to be employed, while the checklist is a tool that helps to implement it. That said, it is preferable to make it based on your specific plan. Below is an example of the elements that could be included in the list.
Set the conditions
Refer to your trading plan and check that the conditions on the screen are aligned with the technical and fundamental conditions necessary to implement your strategy. Is the market up or down? Are you trading for or against the trend? Are you using an appropriate time frame for the instrument you are working on? The success of your operation depends on the settings, so it is important to use the highest accuracy in the analysis of these conditions.
Entity of position
Check and double-check the figures! You do not want to put your funds at risk just for badly checking the numbers. Regarding risk, review your risk-return ratio. Is your capital adequate with respect to the relationship you have selected? Is it wise to use the lever in this operation? If not, you should reconsider your strategy.
Once you have identified the appropriate risk-return ratio, you should decide how to set stop-loss orders to limit any losses. Most traders recognize the essential nature of the stop-loss in trading, however, it will only really help you if you set it to an appropriate level. At the same time, however, the level must be sufficient to allow the stop-loss to do its job and manage the risk.
Catalysts of the market
Are events scheduled before or during the time interval selected for the operation? Balance sheets on earnings, corporate announcements and news can affect market conditions. In some cases, such events may give rise to sudden changes. As a result, performing a preventive search already offers you a certain advantage. It can also give you an idea of the potential market volatility.
Mental / emotional condition
Take a moment to evaluate your emotional state before opening an operation. Do you feel your mind is clear or stressed? Is there something in this operation that does not satisfy you? Bring these simple and quick questions to help you avoid emotionality getting the best of your trading activity.
Your checklist should not be too long and complicated, on the contrary it must be easy to understand and follow. Some traders write down their list, others print it and some even make it a laminated document. The most important thing is to keep it handy so you can consult it if necessary.
This article does not represent an investment advice. Any reference to past movements or price levels is informative and based on external analyzes, we do not provide any guarantee that such movements or levels may reoccur in the future. In accordance with the requirements set by the European Securities and Markets Authority (ESMA), trading with binary and digital options is only available to customers categorized as professional clients.
GENERAL INFORMATION ON RISKS:
CFDs are complex instruments and carry the high risk of losing money quickly due to the leverage effect. 76% of retail investor accounts lose money when trading with CFD through this provider. You should make sure you understand how CFDs work and if you can afford to take the high risk of losing your money.
Source: IQOption blog 2018-10-29 14:17:57