Creating a Trading Plan for 2014

December 15th, 2013 | by Patsy Sinclair
Creating a Trading Plan for 2014
Finance
0

Stocks have soared in 2014 and analysts are now asking themselves an important question. Will the stock market continue to climb in the New Year or will it stall out? And really – will it stall out or will something cause chaos, sending it into a complete tailspin?

Some analysts are less than hopeful. There are predictions that the bull market will continue but those same analysts see an end to the fun. They predict another recession and a halt to all future economic growth; and then down the market will go – again.

Cautiously Approaching 2014

All good  investors, especially pros like Timothy Sykes, recommend taking a cautious approach to the stock market at all times. This especially applies if you’re a new investor and are planning to use 2014 to learn the ropes. If that’s you, the following precautions might apply.

  1. Actually sit down and write out a trading plan. Having a plan is one of the greatest keys to success in any business – especially when it comes to trading money. Treat your portfolio as you would your business.
  2. Choose the right products. Will you trade stocks? Are you interested in currencies? It’s OK to trade more than one product, but you’ll need a separate plan for each – treating each as a separate business.
  3. Assess your skills. Practice by trading on paper before you do anything else. Choose the system you hope to follow and practice actually using it. Identify your signals. Do you really understand them? Are they easy to follow? If not, you may want to reassess the system you are using. You need to use a system that will minimize the number of mistakes you make.
  4. Set your entry and exit points. Do it before you start trading. Stick to your decisions. Changing your mind at the last minute might earn you a little extra, but it’s just as likely to lead you to a serious loss.
  5. Do a little bit of homework. Study some of the great investors and see what they did when they were getting started. Spend some time getting to know what is happening in the global markets. Learn when the important economic reports are released and make sure you’re not preparing to trade right before something pivotal is announced.
  6. Get professional help. If you’re not sure how to complete your plan or feel stuck, ask for help. Join an online course, take a college class, or even hire the services of a broker. Not understanding the market you want to trade in will result in one thing – a loss.

Setting goals, knowing what level of risk you’re willing to accept, and even preparing yourself mentally for each day will make a huge difference in your trading success. Make sure you’re truly prepared before you invest a single dollar.