Can you name the two most must-haves in the investment sector? Tough call, right? But the two most important things are two of the most basic tools that a trader needs to start an investment career. These two things are:
- Trading plan
- Trading strategies
Now, you might say that it is pretty obvious. But no matter what you say, an investor can deny the fact that it will be impossible to survive in this ever-changing market without the help of these two things.
Changes in the market
Those who trade with a robust plan can open new trades with strong confidence. You may have a reliable trading plan but you must follow the rules to build confidence. If you are satisfied with its efficiency and you will get used to the trading system. But here’s the thing. If you don’t update your plans and strategies often enough, you may face some errors and malfunction in the mechanism. Most traders don’t understand the importance of checking their trading tools once they find the perfect one for them.
To increase the efficiency of your strategies compared to this ever-changing market, you need to revise all your strategies at least once in a month. The main reason behind this is you may never know when the market may change and completely transform into an unknown one. At that time, the strategy you thought was your ace, might become worthless. So, to prevent that from happening, you can follow these simple steps to monitor your strategies.To revise your strategies, get a demo account from Saxo Bank. Never try to fix the faults in your system without having access to a high-end trading platform.
Record your entries
A trader, while investing, doesn’t rely on a single trade only. He uses multiple strategies to get the best probable result. Since the list is quite long, it might not be possible for him to keep a track of all his strategies verbally. So, in that case, what he can do is to record them in a form of a journal. In this journal, all the strengths and weaknesses of all the used strategies will be noted so that anyone can take a look at them and evaluate them properly.
Look for the loophole
Now let’s be frank. No matter how efficient your strategy is, it cannot be one hundred per cent perfect. There are always some side effects and loopholes that come free with the strategies. They could possess a threat to your works if you have a blind eye to them. But if they are managed properly, they barely have any influence on your trades. So, you may choose any strategy to work with that fits your trading style. Always make sure to find out its negative effects and gaps and fix them before you use them to trade the real market.
Upgrade the system
Once you are done with finding the gaps and problems, your next work will be to find out the solutions to those problems. You cannot expect that your work will be done once you point out the problems. The problems are not going to fix them by their own either. So, instead of sitting back and relaxing, you should search for the ways to make your strategies flawless. However, looking for the solutions at the beginning may be a little hard. But if you focus on proper technical analysis and good market research, you will slowly learn to fix the problems. You can also take a look at how professionals deal and this might give you the insight to solve your problems.
Try them out
Do you know that strategies also run out of practice? Yes, if you don’t use it regularly, it can lose its efficiency and using an inefficient strategy can never be good for your trade. That’s why you can come up with a routine to practice with all your strategies to check their efficiency and compare them with other existing strategies. This comparison will also help you to know which of the strategies is better for a particular trade.
It may take some time to keep monitoring your strategies regularly, but to get the best results, there is no alternative to practice.