How to Plan Ahead and Optimize Your Trading in 2023
Crypto Basics

How to Plan Ahead and Optimize Your Trading in 2023

Created 1yr ago, last updated 1yr ago

In today’s article, CoinMarketCap Academy dives deeper into the methods of planning and setting goals to help with your trades in 2023.

How to Plan Ahead and Optimize Your Trading in 2023

Table of Contents

2023 is just beginning. This is the perfect time to look back at the past 12 months and learn from our mistakes. Let’s take a step further and use the things we learned in crypto to make the next year even better.

Let’s dive in!

Phase 1: The Reflection

I know you must be itching to find out what you need to do in 2023, but it is important to first look back on the successes, challenges and failures of 2022. After all, these are valuable lessons that can help you turn the next year into a success.

Planning for this year – for the most part – comes down to looking at your experiences in 2022 and making some minor but important changes. This is one of those moments where making a journal comes in handy.

It is time to dig into your trading performance to find errors and common factors in both winning and losing trades. These will help you finetune your approach for the new year.

Phase 2: Planning Ahead

Creating your plan for 2023 significantly increases your chances of success. There are a lot of different approaches to creating a trading plan. For example, the tweet below shows the structure of Adam’s 2023 trading plan. As you can tell, he goes into significant detail, while many usually opt for less detailed planning.

View post on Twitter

In any case, we believe a basic trading plan consists of the items listed below. Remember, these are just the basics, and traders should add or remove any item as they deem appropriate.

Overall Outlook for the Year

The first item on your trading plan is the overall outlook for 2023. In this section, write down any thoughts and expectations you have for the coming year. They do not have to be very detailed, but having a few different scenarios written down will help you to navigate the markets more efficiently.

Goals & Targets

In this section, we dive into your expectations. What are your goals and targets for a trading session? What do you aim to achieve in a single month? What are you looking to get out of an entire year of trading? You will have to list down these goals, and then spend the rest of the year working to accomplish them.

Your goals and targets can be monetary, such as a thousand dollars in profit each month, or they can focus on an improvement of your performance compared to 2022.

Trading Style and Strategies

The best traders focus on a selection of strategies to use, and this section of the trading plan is where you write down the strategies you plan to use in the next 12 months. Focus on brief explainers of each strategy, including your stop-loss placement and profit targets. Here, you also dive into the type of environment in which your strategies work and the conditions required for you to enter a trade based on the strategy. The more you go into detail here, the easier it will be to follow the strategy during the year.

It will also be helpful to write down which markets you want to trade, and – if relevant – which session of a market you want to trade. For example, you focus on trading the S&P 500 during the first 2 hours after the market opens, and the last hour before it closes.

Risk Management

In this section, you set out your risk appetite for the year, and set the basic framework for risk management. This includes the maximum risk you are willing to take on any given trade, rules to keep your emotions in check, and the maximum amount of money you will keep on a single exchange.

Performance Tracking and Journaling

Creating this trading plan is relatively easy and can be done within a day or two. Sticking to it is much harder, which is why a section dedicated to performance tracking and journaling is crucial for the success of your trading plan.

In this section, you describe how you will record your trading activities. For example, you could decide to include your entry and exit points, the reasoning for your entry and exit, the result of the trade, and any other data points you deem relevant.

This section should also cover the parameters you will use to track the performance of your trades over longer periods of time. For example, an excel sheet with the result of all your trades, resulting in information on your win rate, and the average return and RR of your trades.

Doing this will help you to identify problems with your strategy, as well as areas where you outperform. Both of these data points can be used to further improve your strategies and performance.

We also recommend that you decide how frequently you want to look back at your trading plan, to verify that you are still following it.

Phase 3: The Execution

Creating a yearly trading plan is essential to have a consistent trading performance in 2023. It will allow you to trade more clinically, as you can just refer to the document whenever you are in doubt.

Your plan should include the overall outlook for the year, your goals, the trading styles and strategies, your risk management approach and your planned method of performance tracking.

Now comes the hard part: following your trading plan! Writing this plan was the easy part. Now it is time to execute it. The document carries no value if you decide to deviate from it.

Before we go, sticking to your trading plan requires discipline and patience. Don't get discouraged if you encounter setbacks – just stay focused and continue your journey to trading success.

We wish you a healthy, happy, and successful 2023. Good luck!

Writer’s Disclaimer: This article is based on my limited knowledge and experience. It has been written for educational purposes. It should not be construed as advice in any shape or form. Please do your own research.

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