Developing a trading strategy is probably the single most important process you will go through and will structure all your future trading decisions. In essence it is a pre-defined set of rules that you will follow for every trade that you make.
Developing a strategy is an ongoing process that takes some time and thought but does have valuable advantages:
It removes the emotions from trading: A trader following a strategy already knows the path that they will take whatever the market does. A trader that doesn’t have a strategy will generally make decisions when the market is open and will constantly be reacting to market fluctuations. These traders are liable to get emotionally attached to their positions and they are likely to panic and experience indecision when the market doesn’t move in their direction, as they do not have a prepared response.
Saving time: Developing a strategy will help free up your time to research the market and products as you will not be constantly watching charts and monitoring the performance of your portfolio.
Once you have decided upon the product(s) you will trade you need to define the parameters of your trades.
