How To Prepare A Trading Plan To Survive In The Market (Part 2)

How To Prepare A Trading Plan To Survive In The Market (Part 2)
How To Prepare A Trading Plan To Survive In The Market (Part 2)

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This is probably going to be the most important article in this Price Action series. I’ll highlight the words “most important” again because it’s practical. Trading plan is a must-have for any trader in the market.

In all my articles, I always emphasize the word SURVIVE. Therefore, my preparation and planning are aimed at a single goal: SURVIVAL. Believe me, as long as you SURVIVE, you will naturally earn money.

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Capital plan and risk management in trading

How much money will you prepare to trade Forex?

No, the question should be: How much are you willing to lose to enter this market?

Answer: Each person has an income level. You should only put it in the market that is within your reach. The game of money is a game of psychology. A plan on capital and risk management will help you reduce the pressure from psychology.

For example,

+ My income level is $30,000/month => The total capital I am willing to put into my account is $15,000. And for each trade, I only accept a maximum loss of $300. Do you wonder why I can earn 30k USD a month? There will be a separate series to talk about this.

Capital plan and risk management in trading
Capital plan and risk management in trading

+ So now, I know in advance the risk when I make the wrong decisions: $300.

+ I will manage capital according to the R/R ratio (1R = 300$).

Psychology preparation in a trading plan

Lower expectations

The easiest way to make a lot of money is to import heroin and sell it to addicts.

The fastest way to get rich is to go to the nearest bank, show a gun and… tell that you are a robber.

The market is definitely not a place to make easy money and get rich quickly. Certainly not. So, if you come here with the illusion of “financial freedom”, it’s almost 99.99% that you will lose money.

Stop fantasizing about trading
Stop fantasizing about trading

The game of money is the game of those with knowledge, patience, and discipline. Without 1 of the 3 things above, you are forever just a “prey” of the market.

So, the first goal will be SURVIVAL. Do everything to survive in the market. Believe me, as long as you exist, money will come naturally. Throughout this series, you will see that. I can lose 5-7 trades in a row, but as long as the account has money, just 1 correct trade I will recover all the losses.

Get used to the fears

– How much will you lose when you are wrong?

Answer: 2% of the account. Is it too big for you? If yes, reduce that number to the lowest level which makes your mind comfortable.

In case you find it difficult to lose $200, reduce it to $20. If you still can’t accept the loss of 20$ for 1 trade, reduce it to 2$. It doesn’t matter, the important thing is that you feel comfortable.

Get used to the fear
Get used to the fear

– Losing money is the biggest risk in trading?

Answer: No. Losing money is part of the plan and the biggest risk is when you go wrong with the plan.

Experience: Fear of losing money is the biggest reason you let loose your discipline. Don’t dare to cut losses and always take profit early. The more you fear losing money, the more money you lose. So, instead of being afraid, make it a part of the game, face it, accept it and get used to it.

Learn to control everything with reason

Things in the market will always go like this. The price fluctuates => Your account money fluctuates => Your emotions move too. At this point, all previous plans will become superfluous and in the end, you lose everything to the market.

Personal experience: Enter orders correctly with what you have planned and ignore them.

Of course, there are many other traits such as patience, discipline, restraint, etc. But I will include it in later posts in this series.

Diary of September 3, 2021

Deposit $15000 into Exness exchange and $5000 into Binance to prepare capital for this Price Action series. In the next article, we will start to go into the real battle.

Capital in crypto exchange Binance
Capital in crypto exchange Binance

You should read below articles to prepare for the next one.

– About trend: Uptrend, Downtrend, Sideways, and Retest. The market trend is always the first factor that you and I need to pay attention to. Either follow the trend to make money, or go against the trend and die.

Supply and Demand zone. This will be where we focus on monitoring the price movement.

– 2 basic candlestick patterns: Pin Bar and Marubozu. The appearance of these 2 candlesticks in the Supply or Demand zone will be a signal for me to enter an order.

– My favorite time frames for analyzing and predicting price trends are Chart D1 and H4.

– Drawing tool: Tradingview. Entry tool: MT4.

Chart D1 and H4 on Tradingview
Chart D1 and H4 on Tradingview

– I will trade on every currency pair, gold, and Crypto market using the Price Action method. This will be a long series of practical trading combined with theory. You should re-read some of the articles I list out to be able to better understand what’s next.

See ya in the next article.

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