Greetings crypto Academy Community this is yet another interesting class because it is circled around trading and capital management. In the world of trading, there are important things we should take cognisance of and the market is always risky for a person who is not well educated on this.

HOME WORK

Theory

1. Define and Explain in detail in your own words, what is a "Trading Plan"?

1. Explain in your own words why it is essential in this profession to have a "Trading Plan"?

1. Explain and define in detail each of the fundamental elements of a "Trading Plan"

Practice (Remember to use your own images and put your username)

• Build a “Trading Plan” and cover all the basic elements discussed in the class. For this, you should NOT take the examples that I put in my class (Including the example amounts), use your own examples and your own images to make said plan, you must also base this "Trading Plan" as if you were operating on the platform of " Binance ”, taking into account that the minimum amount of exchange or investment is $ 10.
  Remember the plan you build should have the following:

Your own Risk Management

Your own Capital Management

• Say in detail, what are the rules or Psychology that you yourself would use to fully comply with said plan and be able to operate the cryptocurrency market

• Finally, make a table with the strategic planning of your capital, covering at least 6 months

INTRODUCTION

This topic i must say is an amazing topic in that prof. @lenonmc21 did a good job in making us know the advantages of making trading plans which are risk management policies.
In fulfilment of the understanding of the lecture i will be attending the above assignments.

QUESTION 1

Define and Explain in detail in your own words, what is a "Trading Plan"?

Trading plan is like a lamp to the feet of every investor because they have the DOs and DONTs that were placed when creating their strategy, risk management plans, capitals for the trading having it at the back of their mind that they must follow all conditions verbatim else the market may go against them.
Our market plan should be checked before any trade because it will remind you what you ought not to do in the market in order to achieve success in the market.

Marking back to my years of forex trading, i made a 6 months trading plan in a diary which contained my short and long term goals, the amount i wish to make in a day and how to strategically abide by it even when the market seem to be fully to my favour.

A good trading plan should contain the following;

• Short and long term goals.
• Duration to which you want to achieve your goals.
• A good strategy for use in trading.
• A good risk management plan.

QUESTION 2

Explain in your own words why it is essential in this profession to have a "Trading Plan"?

It is expedient for a trader to have a trading plan, there is one old saying that " he who fail to plan, plans to fail". So as a trader, trading plan plays a great role in terming you on how to control your emotions on a good or bad trading day. Without a trading plan a trader may see himself fixing up a strategy today and doing almost opposite of his strategy the next day. So, why not have a trading plan and set achievable goals for yourself.

I see trading as a profession, and for you to be good at what you do, you might have practice it over and over again, checking out for loop holes in your strategy and getting it fixed in order to attend perfection in your strategy which will always give you the best result when you stick to it.

In the world of trading, the key requirement is discipline which can only be achieved using a trading plan.

Trading without a trading plan makes trading which in the normal sense should be professional look like a casino betting, i.e a sort of lucky raffle.

I hope with the above reasons i have done justice to drafting out the potentiality of a trading plan.

QUESTION 3

Explain and define in detail each of the fundamental elements of a "Trading Plan"

In the previous question i was able to do justice to the importance of having a trading plan as pertaining to how it terms out trading habit.

I will be explaining four essential elements of a trading plan.

TRADING PSYCHOLOGY

I chose to talk on this first because it entails our emotions and reasoning when it comes to trading.
Developing a good trading psychology will play a great role in helping us control our risk, taking into cognisance the percentage of our trading fund we have up for each day trade.

As regarding trading psychology, some of the examples include:

• Ambition: a trading plan contains the number of trade you should open in a day. Peradventure you have a good trading day winning all your 5 trades with encouraging profits, in a quest to make more money by deviating from your trading plan can lead to an unwanted loss.

• Revenge: one mistakes traders make is seeking revenge, because you lost two or three trades on a bad day instead of withdrawing from trading that day, we insist finding means to make a positive trade out of a bad day, and at the end of the day more losses are incur.

• Trading plan : following trading plan can never be overemphasized.

• Problems : this is also linked to emotions , market has no feelings, if you have problems boiling up in your space, that is not the best time to trade because you stand the chance of loosing concentration and at that point, you are prone to losses.

RISK MANAGEMENT

"Little is much" a phrase most traders really seem not to understand, that is risk management for me. Agreeing withing yourself and your trading jotter that a maximum of
4 trades will be made a day or a maximum of 100 pips will be achieved a day and sticking to that is a good risk management strategy, because there is no ideal person, so with this losses can be minimized.
Market cannot always be to your favour so a lost operation rule should also be putted. Say, two negative trades in a day and that's up for a trading day.

CAPITAL MANAGEMENT

Capital management basically talks about the percentage of our trading fund we are willing to loose in the market. It is expedient to maintain a rigid capital management in order not to incur losses.
To further explain this i will give an instance:
A trader that performs 2 transactions in a day and his loss percentage is 3% per day, so if his total capital should be $2000, the trader is risking $60 everyday that is if he looses. You will believe me that this won't affect him much because that is what he is willing to loose.

If a trader risks 3% it will be to his best option to go for a 1:3 risk profit ratio because that is the only feasible way of maximizing profit and minimizing losses.

Account Control

Taking control of your account is in term of how much we are to make in a month, the length of days it will take to make the stipulated amount and the number of trade we must take a day.
It is advisable to write down your plans and strategy as pertaining to how a trader intend making his profit in order to attain his monthly trading goal.

QUESTION 4

Build a “Trading Plan” and cover all the basic elements discussed in the class. For this, you should NOT take the examples that I put in my class.
With a graphical representation i will show how my trading plan will be

My initial capital of $2000 gives me the boldness to with stand pull back in the market and still remain in the market without closing my position due to fear.

There are few things you must consider here they include;

• Duration : lets say you have in mind to achieve your set goal in 6 months. Although now we are in a bullish market but on the other hand in a case of high volatility time management helps reduce risk of losing.

• Set goals to achieve : this is one of the most important aspect of trading. And the set goal must be feasible.
  With my initial capital of $2000 and a 6 months duration if i set a goal of making monthly 30% i will be making $9,652 at the end of 6 months.

For the above reasons, it is important to study the best time to trade to achieve your goal for the given time ( 6 months).

• Patience: trading is always a game of the patient, because you take a lot of time to build a strategy and for you to be profitable in your trade you must wait till you see a signal that matches your trading strategy.

• Change : change they say is constant but in trading you consistently follow your strategy till you perfect it although you might incur losses building the strategy but you will incur more losses if you give up the strategy for another one. But i advice you use a demo account to build your strategy as a means of risk management.

Risk management

As said before knowing how to curb losses cannot be overemphasized.
A trader can make a trade in a day just to curb losses while another makes 3 a day. These are their personal ways of curbing losses.

Capital management

Capital management entails the risk- reward ratio of a trader which on an average should be 1:3

Trading Psychology

Trading psychology takes care of emotions, trading plan, and bearable losses of a trader.

Account planning and control

This is the last but not the least. It is ideal to take record of your trading profits and loss at the end of each month to know your progression towards your set goal.

Below is my planning table:

If I am to follow my trading plan I'm sure of attaining at least 75% of my set goal which is a very nice try.

CONCLUSION

From the lecture we have ascertain that the advantages of trading plan cannot be overemphasized, so for that reason we should inculcate the habit of trading with a trading plan.
I assure you as a trader, if you should heed to your trading plan, you will always have reasons to smile.
Prof. @lenonmc21 i must not fail to appreciate you for the lecture, i'm saying thanks once again for the teaching.

CC:
@lenonmc21