Thread by @elearnmarkets

An 8 Step Checklist Before Entering Any Trade:

A thread(🧵)... (1/18)

1. If the market is in a trading range or trending: Traders must know that if this happens, there's a higher probability of right #trades. Always remember, the trend is your best friend (2/18)

#Traders must also ask if the prices are in a strong trend and if they want to continue to move along with this trend. (3/18)

At times, Traders also choose to trade within a range. The #stocks keep on bouncing between the #Support and #Resistance. Using indicators like #RSI, CCI or Stochastics help here! (4/18)

2. Are there support/resistance levels nearby: Stocks tend to respect these levels and traders must identify both the support & the resistance.
A trader should not enter a #long position, for example, when the resistance is nearby. (5/18)

3. Do the Indicators confirm the Price Action: Every #trader must have 2-3 Indicators that complement their trading strategy and confirms the price action. (6/18)

However, the Indicators must be of different groups. For example, #momentum Indicators like RSI, and #volatility Indicators like Bollinger Bands. (7/18)

4. The risk-reward ratio: This is the number of pips the traders are willing to risk to reach their target. Traders must try to have a positive risk to reward ratio for every trade (8/18)

5. Can there be a significant economic relapse: Any such relapses might impact the trade. Any #economic news like #GDP, CPI, or any such data might act as a catalyst. (9/18)

6. How much capital is being risked: One must ask how much #capital are they willing to risk on a single #trade. Being too overconfident about one single trade and investing heavy capital in it can often lead to dangerous consequences. (10/18)

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7. The exit strategy if things don't go as planned: There must be a #backup plan if things go South. A Stop-Loss is a must. The stop loss levels can be traced using #Fibonacci of prior candlesticks! (12/18)

8. Is the Trading Plan followed properly: Traders tend to digress from their original plan when they are greedy for more #profits. At all costs, and must tick all your boxes in their checklist. (13/18)

Read the entire blog post here: sedg.in/q1d3wi2f (14/18)

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