6 Steps to Crafting a Winning Trading Strategy
Success in any business begins with having a strategy. But make no mistake, not all strategies are created equal. A flawed strategy can prevent you from reaching your full potential but a solid strategy gets you closer to your goals.
The question, though, is how do you craft a solid strategy?
In our previous article, we talked about what makes online trading a business and why you need a strategy to succeed in online trading. Building on that knowledge, we’re giving you 6 steps you need to make a winning online trading strategy.
By the end of this post, you should know the 6 steps which include defining a scope and vision for your trading business; assessing yourself, making goals, drawing up a plan and making simple tactics that you can follow as you pursue your online trading business.
1. Assess your skills and your situation
The first step in crafting your trading strategy is to understand who you are and what skills you can bring to online trading. Self-assessment is important for any entrepreneur because it helps you identify aspects of your personality that may hinder your growth and aspects of your personality or situation that can push you to success.
For example, if you have a lot of time on your hands, you may decide to go into the more volatile assets like FX spot because you has all the time to monitor the market. If you do not have that much time, you may just want to buy and hold assets. Hence you may consider the stock market.
As you approach online trading, you need to focus specifically on your strengths and your weaknesses. If you are someone who is detailed oriented, then it’s a skill that will come in handy as you start trading online. Where you find yourself lacking, you look at ways to improve and study the necessary habits you need to develop to succeed as an online trader.
Read Article: The 10 Habits of Highly Successful Traders
2. Determine the scope of your business
Next, you need to define what actually interests you about the business. For instance, if you’re a lover of food who wants to open a store, you have to decide what food to sell: pastries, Ghanaian dishes, Japanese cuisine etc. Defining your scope allows you to focus and provides a direction for your business.
Similarly, online trading has so much to offer such as Forex, futures, bonds, stocks and more. You can narrow your scope by focusing on industries that interest you like oil or technology. By limiting your scope and choosing which financial instrument you’re going to trade, you start to pave the path for your online trading journey.
3. Define your vision
Knowing why you want to be in business is just as important as knowing what business you want to pursue. Steve Jobs started Apple because he wanted to get a computer in the hands of everyday people and this gave him the drive to create great products.
You also have to figure out why you want to pursue online trading. Is it to challenge yourself, to become your own boss or to develop financially? Where do you see yourself in 5 or 10 years from now and how can online trading get you there? Be honest and write down your vision to remind yourself of what your long-term goals are and what you hope to achieve.
4. Set the Goals you want to achieve
Now it’s time to plot what you want to achieve through online trading and where you want to be. Making concrete goals helps you to measure your success, gives you a clear direction, and helps you stay motivated. Do not underestimate the value of goals as research shows that people with written goals are more likely to succeed than people without any goals.
The kind of goals you should be thinking about as you pursue your online journey are what kind of profits do you want to make, what financial instruments do you want to learn more about, and so on. The more specific you are, the better your chances are of achieving your goals.
5. Draw a Plan of Action
At this stage, you’re finally ready to make a plan that helps you accomplish your online trading goals. It’s important to make a plan that fits your needs and not a general plan that looks good on paper. For example, if you know one of your weaknesses is your tendency to overspend, then you can make a plan that puts you on a weekly or monthly budget.
Online trading is an exciting and personal journey that can challenge you and help you grow. That means that what’s worked for someone else is not always what will work for you so you have to be conscious as you develop your plan.
6. Break down your plan to smaller, specific tactics
The sixth and final step is to breakdown your plan into short term plans you can accomplish. This is by far the most practical aspect of drawing up a strategy because you start to focus on the day to day actions. By breaking down your plan into smaller tasks, it makes it easier to accomplish your goals and grow as an online trader.
At Fab Investing, we’re here to support you as you explore online trading and the tremendous potential it offers. We have tools that makes it easy for you to build a winning trading strategy. With a well defined trading strategy, what looks like a mountain to climb starts to look manageable and achievable. This gives you the confidence to build your online trading business and continue growing in success. In our next post, we’ll show you what to avoid when building your own strategy.
If you want to learn more about how we can help you build a winning strategy, download this free Starting Guide:
Our aim is to provide business-minded Africans with the necessary tools and resources to empower them build a successful business in online trading. We believe Africa is on the verge of a rise, and Africans will be the ones to drive the continent to the next level of economic expansion. For this reason, we dedicate our efforts to bringing to your doorstep, access to the world’s financial markets, which hold vast business opportunities.