In the famous words of Greg Reid, “A dream with a deadline becomes a goal. A goal broken down into steps becomes a plan. A plan backed with actions becomes your dream come true.
This is the very mentality that every cryptocurrency trader should adopt. Crypto trading is a volatile investment that requires patience, a plan/strategy, action, and continuous assessment to secure profits.
But what exactly is a trading plan for crypto trading? How does it help? How do you make one? As our Superorder team continues developing the best features for your number one crypto trading terminal and educates you on everything there is to know about being a successful crypto trader. Today, we’re talking about cryptocurrency trading plans and why you need them.
A crypto trading plan is a unique set of rules that you follow to guide you on when and how to trade. It defines a trader’s behavior and determines their criteria for opening and closing positions, their financial goals, risk management techniques, and their money management rules.
To some, trading is a hobby. To many, however, it is a business. Just as profitability is the main objective of a business, professional traders buy and sell with the same goal. The crypto market is an extremely volatile environment, with coin prices fluctuating in double-digit values. It, therefore, makes it difficult for traders to buy and sell without a set of rules to guide them on the best time to place their trading moves. These set of rules and guidelines from the trading plan are incorporated into your trading system and guide your trading moves in real-time.
There are two broad types of trading plans for day traders. These include discrete and system traders.
This crypto day trading plan requires no preparation. It is used by advanced traders that make their trading decisions manually after continuous assessment of the markets they are trading in. Having a discrete trading plan involves analyzing the information from the market analysis, trusting your intuition, and making the trade move with the hope of making profits. A discrete plan does not rely on a machine to decide for you. It only provides you with the real-time information you need to make your decision.
A system trader’s plan is more of what professional traders use for their trading systems. The set of rules and parameters are incorporated inside the trading system and trades on your behalf. In contrast to discrete plans, system plans are fully automated as they can analyze the market and rely on the coded program to execute trade moves when the defined parameters are met. It is a more accurate trading plan as it eliminates the errors realized from wrong intuition used by intuitive traders.
A complete trading guide comprises of defined parameters which cover the following:
The main objective of trading is to make profits. Every other parameter programmed in your trading plan is aligned to this ultimate objective.
Day and swing traders operate on different timelines. Day traders buy and sell cryptocurrency coins by opening and closing multiple positions in a single day. Swing traders, on the other hand, participate in trades that can remain open for weeks or even months. Both types of traders consider the timeline of their trade and set parameters that guide their trading moves within their trading time.
The crypto market is highly volatile. Traders rely on price fluctuations to determine their trading goals. Bulls tend to make profits when the market is up while bears make profits when the market is down. Their specific trading goals, such as their profit targets and their stop-loss orders, are incorporated into their plan for trading crypto.
A good plan for crypto trading tends to maximize your profits while minimizing your risks. This involves creating unique strategies to achieve the desired portfolio.
A trading plan guides your trading moves depending on the market conditions. It only buys, sells, and stops trading when the desired parameters are met. It stops you from taking unnecessary risks once you achieve your profit target. It also limits your losses with its stop-loss order. For instance, if you place your stop-loss at 10% below the price at which you bought the coins, it will limit your losses at 10%.
Professional traders often trade in different markets. Each market has its level of volatility, making it hard for traders to keep track of all markets and make informed decisions. A trading plan for crypto coins is automated to record and analyze each market conditions, test your strategy against this data, and provide useful analytical charts for more informed decision making. In other words, it aids traders in generating live trade ideas from the market information.
Different markets have different coin values, risks, and arbitrages. Crypto trading plans aid traders to understand new markets they wish to trade in. Traders use this analysis to develop unique strategies that work best for that specific market.
Trading plans are executable orders that rely on pre-set parameters monitored by bots. They only execute the order when the desired conditions are met. Unlike humans, trading bots are not misled by emotion, no matter the direction a trade takes. Trading plans eliminate guesswork and impulsive behavior that could cost you more.
Without a trading plan, traders would have to spend abnormal hours tracking every element of the market. A trading plan automates the trading process, allowing traders to focus on more productive things such as exploring new markets. A crypto day trading plan trades on behalf of day traders, allowing them to attend to their normal jobs during the day. The trading plan for crypto coins also enables swing traders to attend to their families and other commitments by trading on behalf of the investor for as long as the trade is open, even if it includes the weekends.
Superorder is an advanced cryptocurrency trading platform that allows traders to create their trading plan and automate their trades! Get the most out of automated strategies and start earning with Superorder!