Creating a Business Plan

Trading online as a business needs preparation and planning. Daily goals whether they are trades per day or money gained/lost per day should be established. If you have given your self guidelines in which to follow make sure you follow them. Dealing with a loss for the day was one of my problems when I first started trading because I knew what I was doing worked so it was difficult to give up. The key here is to maintain your balance no pun intended. If you have reached your maximum loss for the day then that’s it you’re done. Tomorrow is another day. Following your guide lines when you have a winning day can always be altered a bit since you might be in the zone and want to keep the profits rolling. However you don’t want to give back what you have worked so hard to gain. I am here to tell you trading is work. If anyone thinks all you do is watch a computer screen and push a couple of buttons they are sorely mistaken. Trading is an “art form”. Many people have said this and now I said it too. You need to cultivate your craft. Work at it, study it, develop good working habits and study the work of the masters.

I believe most traders base their decisions on technical analysis. The technical analysis of charts and price action can involve an infinite number of possibilities. I’m not saying price action is random but depending on what time frame you are viewing predicting price movement can be different for each individual trader. Reading a chart takes into account the past price of any given instrument and presents an image. Analyzing the chart will develop a point of view. The larger the time frame the less noisy the action seems. The dictionary defines a chart as “a map showing information to use by navigators”. The image also conveys a story. The trader now knows what happen to price and the possibility of understanding what will happen next. Take for example our own history of relevant events. These events almost always with a high degree of probability repeat themselves. I chose history as a comparable result because sometimes as a trader you will need to look at large time frames, weekly, monthly, and even yearly to find excellent trading opportunities even if you are a day trader.

Support and resistance is an example of price repeating itself. Traders as a collective establish a mentality at a certain price levels and perform similar actions. A support line is established if price falls to certain value area and stops declining. The amount of sellers decrease and buyers step up and start moving the price back up. For the sake of simplicity the support line has formed a double bottom. This value gives us a stop loss. If we entered a trade to the long side the support line would be used as a stop loss point. Where you place your stop loss below the support price depends on your risk tolerance. Many times price penetrates support by very little and then resumes its momentum to the upside. A disciplined trader would accept being one ticked and look for another trade opportunity.

This is Brad Barbieri a.k.a. easyflow. I have been trading the markets since 1998. As traders we need tools and information that gives us an advantage in today’s market volatility. You can take action by submitting for free market analysis, opening a practice account, and/or download a free e-book. Remove the stress and indecision from Day trading futures. Click on the link to get the tools and education you need to Day trade e-minis. This is the third article I have posted on Trading for a Living so if you are interested check back here. I will continue to post information on the subject

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