Mastering the Art of Trading: Build a Strong Foundation through a Well-Planned Approach

Having a well-defined plan is essential for achieving success and realizing gains in the trading world. Although many people talk about having a plan, few actually show how to create one. Here, I am sharing my personal trading plan that has improved my profitability over time and has helped me navigate the market. It is important to note that this plan is tailored to my personal style and goals, as though I prefer day trading to keep myself busy, I’ve also developed a medium to a long-term approach to diversify my investments. Every trader must tailor their own plan to their individual needs.

The plan begins by analyzing the trend in the market. I look for bullish or long setups and avoid bearish or short positions. To determine if a market is in a bearish phase, I look for the pattern of a lower high [LH] and a lower low [LL], as well as the price being below the relevant exponential moving averages [EMAs]. Conversely, to identify a bullish phase, I look for a higher high [HH] and a higher low [HL], along with the price being above relevant EMAs. I primarily use the 9-day EMA, but also consider the 21-day EMA.

Another factor I consider is the leading sector in the market. The sector that is showing strength in terms of price action is generally the easiest to trade. If no leading sector can be found, I avoid trading and wait. I also avoid trading in markets that are already parabolic in nature. To help keep my outlook organized, I build a watchlist of the names in the leading sector and add benchmarks, such as Bitcoin [$BTC$], Ethereum [$ETH$], and the US dollar index [DXY], for reference. I then narrow down my list to the top 3-5 names and filtered for the best setups. I look for charts that show HH and HL patterns, as well as being above the 9-day or 21-day EMA. I also look for accumulation zones but am cautious in distinguishing between accumulation and distribution.

Finally, I look for bull flags and closures above past highs or resistances as a way to scan for potential trades. This method is simple and profitable if done correctly, but there are many other patterns, indicators, and techniques that can be used. The key is to not force trades and wait for the right opportunities.