Trading Setup

(Traders secret...)

In day-to-day life we plan many events. We plan many things from waking up in the morning to going back to sleep. Even many times we plan for Decade also.

According to the situation and other impacts on our lives, we change our plans and make new ones. But we never change our Goal. The plan may be for a short or long period; it depends on how big is our goal.

Like the same, in trading also there should be a plan. That’s what we call our trading Setup. We trade according to our setup. It varies from person to person. One may require a huge plan to trade (E.g.: – HNI, institutions).

Many a time we don’t take trade because of our plan rules. It tells us about how disciplined we are and it minimizes the loss by preventing us from taking the wrong trade.

A checklist can help us to follow our trading setup. Mark the point that are to be confirmed, before taking trade. In the beginning, it is difficult to follow the checklist- by practicing regularly it becomes an integral part of our set-up.

Sometimes we miss the trade because of waiting for a long period. that’s okay, if you are not confident about it, then don’t take the trade. It keeps our capital safe from buying/selling for the wrong price.

The setup of the Buyer and seller is different. Both think from their perspective, that their actions are different always. A good setup requires a lot of paper trading and backtests. Once your set-up is accurate and ready, next is execution.

Key Points for making Good Set-up for trading: -

Make checklist points.
Wait for confirmation.
Back-test your strategy.
Avoid unnecessary trades.
Fix your trades per day (like 2/3/4 trade only).
Follow your rules.
Risk management.
Diversify your fund.
Always put SL(Stoploss).
Review your Checklist and progress regularly(Check whether it requires any changes in it).

In this blog, we know about only the basic set-up idea. In the upcoming blog, we discuss it in detail.

-By

Vishal Kumar K R