Now, when you understand all the basics of digital asset trading, trading plan is important for your goals and targets so that your trading process is more directed and well organized. Besides that, the trading process can also help you to get to know yourself better. Knowing your competence and personality in the trading process can help you to adjust the right techniques and strategies because each individual has a different trading style.
Trading plan with the SMART method
- The first letter of SMART is S, which is taken from the Specific which means specifically refers to certain things with clear details. remove it from a digital asset and where take profit and stop loss are for that digital asset. Then, how many targets do you want to achieve? For example, the target you want to achieve is 20% or 30%.
- The second letter is M, which is Measurable which means it can be measured. You have to take measurements first before buying certain digital assets. But what is measured? First is your capital and the amount of digital assets you want to buy. For example, will you immediately spend all your capital to buy 1 type of digital assets or some other digital assets?
- Next is A, which is Achievable, which means it can be achieved. The target that you set, are you sure you can achieve? So, when you set a profit target, can the profit target be achieved? Suppose you want to get 20% profit, can you achieve it in 1 year? You can check the price history of the digital assets that you hold and know its movements for one year. Can such a movement reach your target?
- The fourth is R which is reasonable which means it makes sense. Do you think the target you made made sense or not? Even though in general you are asked to set high targets, but does it still make sense for you to achieve?
- The last one is T, which is Time-frame, which means time period. For example, how long do you make a profit target so that it is reached or not achieved then you decide to exit? The rest, time frames can also be used to monitor the strategy and check whether or not a strategy is effective for you? You can judge whether the strategy is suitable or not for your trading style.
Now, I have explained the importance of creating trading plan with smart method before you start trading. Also, the SMART method for using a trading plan so that you can set clear trading goals, reach targets and get to know yourself in the trading process!
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