Planning for profits

One of the keys to successful trading is to be emotionally detached from the markets you are trading. How can you do this?

Two components, which I feel are essential is preparation and good risk management. By being prepared you will find that you can trade with confidence and feel comfortable with your position in the market.

In the following example, I would like to share with you some thoughts during a recent trade on the Dow Jones. By being prepared in advance for a possible Low Risk setup and simply applying patience and discipline, the market provided a trade on the Short side with a favourable outcome.

Take a look at the following chart:

Dow Jones Daily (Courtesy of Equis)          

Using the strategies taught at www.spreadbettingtowin.com the Dow Jones reached a pre-determined resistance level of 10754. This was an area where I was prepared to look for a Short Trade only if the market presented an opportunity.

Once the market had indicated that it would now change direction, my first concern was to determine the risk on this trade and a potential exit target. This is something that as a trader you should always ask yourself before taking a trade and not during the trade.

The initial target for exit was 10209, which meant that once the trade started to work out according to my plan, I now had an area to focus on for my Exit strategy.

ODL Markets provides you complete control over your trade management either by the easy to use online platform or telephone. In this example you would have been able to quite easily manage your trade by adjusting your Stop Loss Order.

The result for this trade was £4240 Profit Tax Free based on £10 per Point. The return was a 424-point return based on a 100 points risk.

This trading example demonstrates that you really do not need to be concerned about the outcome of a trade. As long as you have defined the potential risk on your capital and are comfortable with the figure then as a trader you must simply act upon your trading plan.

Professional traders focus on risk not on predicting market moves. As long as you have a good trading plan and a sound trading system with effective money management, you can certainly achieve a favourable edge in the market.

By preparing yourself in advance, when a Low Risk opportunity presents itself you can take advantage of the situation with confidence. Remember you must at all times remain objective. The market will do what it wants to do – not what you want it to do. If you can accept this fact then it puts you one step closer to trading successfully.

Until next time, I wish you safe trading.

Sandy Jadeja | Chief Market Strategist

sjadeja@odlmarkets.co.uk