Do The Prep – Get The Pay Back

One of the key elements to being a successful discretionary swing trader is ‘Preparation’.  I’ve written about this to some extent before and covered the 5 or 6Ps.  The best trades I have had, have all been pre-planned.  Thorough preparation before taking any trade, particularly swing trades, tends to pay off handsomely.  This entails the following:

  • If coming into the markets ‘cold’, spend some time ‘acclimatising’ , maybe a few days, just getting a feel for the markets.
  • Make sure you know what key news events are coming up for that week and don’t over expose yourself to risk, particularly in the run up to things like NFP and FOMC.
  • Try and develop a Fundamental view of the currency pairs or financial instruments you trade, when this is backed up by a Technical Set Up then the odds of success are improved.
  • Either on a Friday evening at or near the close of the markets or over the weekend, spend some quality time looking at all the relevant time frame charts for your chosen financial instruments or currency pairs and mark up and note key levels of Supply or Demand (Resistance & Support), note any Dynamic Support or Resistance, note Key Fib levels, Major Trend Lines, Key Moving Averages, Wave Structure, Price Action, Candle Stick Patterns, obvious Trends, Common Patterns, Corrections, Reversal Patterns, Divergence and so on.
  • Look for likely areas where price could go, such as key levels or zones of Supply and Demand, key Moving Averages (hint: the 200sma).
  • Look for actual and potential ‘Confluences’ – points in time and space on the charts where multiple things occur across time frames.
  • Establish the ‘Context’ of any potential trades.
  • Check the USD Index and other correlated pairs or instruments if relevant.
  • Do What If’s – so if price goes here and does this, what am I going to do – a potential ‘game plan’, if it then does that then you should have a trade plan at the ready.
  • Keep a ‘Watch List’ of ‘Potential Trades’.  This should be the result of all your above analysis.  Set up ‘Alerts’ on your trading platform – easily done in MT4.
  • Try and be a ‘Sniper’ rather than a ‘Machine Gunner’, selecting your trades carefully and watch them set up.  Good trading is as much about timing as it is other aspects.
  • When price sets up a potential trade, wait for confirmation before pulling the trigger – this could be a candle close, the break or close beyond a level of Support or Resistance or a Trend Line or Fib Level a reversal candle stick pattern or even a pull back after a breakout and so on – the point is don’t get seduced by current candle price action, stick to your plan.
  • Before entering a trade you should know your rough entry area, stop loss level, and where you intend to move to Break Even or better and why and where you will take profit, whether you will have any stretch targets, use a trailing stop or where you will close out completely.
  • When you do enter the trade, set your stop loss and take profit limit orders and then let it run.
  • If you do the above and use robust Risk and Money Management you should see your trading results improve.

If you are an Intra-day Trader then much of the above may still apply, you still need to know your levels, yesterday’s high and low, price action, candlesticks, context and so on.

If you need help with any of the above, learning to trade or improving your trading then you may wish to consider our Personal Mentorship Programme.