A method is one of the prominent keys in market to attain profitable trades. The better you sharpen your method, the better will be your trading. The market is not always in one phase: it is uptrending, downtrending and choppy or sideways. So we must also have a method which will work in one phase and does not hurt our capital when market change its phases.
For example, in an uptrending market, buying breakouts is one of the most profitable trades. But in an sideways or choppy market where market remain in range, buying support and selling resistance is key factor.If you are a breakout trader then you should have some way of identifying choppy markets, which will avoid at least some of the losses that sideways markets cause to breakouts.
Here are some guidelines to develop a simple trading plan.
The first work we should do is try to analyze market environment and what is the ongoing trend in market on monthly, weekly and daily basis.
Then, we should identify the time frame in which we want to trade. Maybe we want to trade as a swing trader, using hourly charts.
We should determine our preferred style of trading – breakout, pullback, support and resistance.
Finally, we should trade on our preferred time frame when market phase matches with our preferred trading style.