Table of Contents
It’s one thing writing an article about why trading according to a plan is the only way to go. But without giving the traders the tools of how to create a trading plan, success may not be as reachable as your true potential could be. Below is a 4 part plan to refer to when beginning to strategize.
But first things first – this plan may be on your laptop/tablet or where ever you prefer, still, have a place/folder/book to make notes, keep a track of ideas, log your movements.
Trading without a plan is like looking for a treasure without a map. You will make a lot of loops before succeeding, you will make the same mistakes over and over again.
A trading plan provides you with clear steps and actions to implement. Reduces improvisation and stress since you will know exactly what to do for every scenario.
Let’s follow the four essential parts of a successful trading plan
This is the framework of your trading plan. Without thoroughly making these decisions, your plan may not be fluid.
Here is an article that will help you planing your trade ahead
Money management is the most important part of the plan. This where you should understand how “risk of ruin” relates to your trading.
When calculating your risk of ruin, any number above zero is too high. That means you will eventually blow up your account in a matter of days, weeks, or months.
Considerations and to-do list:
If you find yourself doubling down and burning through your capital, you should take a step back because it’s possible you’ve crossed over the line into gambling. Throwing money at the market without a clear goal nor a coherent plan is not trading.
If you need more help with money management, you should read this article
Psychology is the journaling section. Journaling is a mental support system, gives way to ground yourself and your thoughts. It helps to place you in a mindful state to clear clutter, bring clarity and problem solve.
Take advantage of your free time to journal or keep a side note pad to jot down ideas or reminders during a busy day.
In addition to profit and loss ideas, consider these points:
Focus on what you can control, not what you can’t control. There’s no one else to keep tabs on you. You’re working solo and need to discipline and control yourself.
Make this introspection part of your daily routine. If you want to be great, you’ll need to work on it all the time.
Lastly, which tools will you be going to use in order to facilitate your trades?
This guide that I have put together is merely to give you a framework for what has been tried, tested, and proven. I have tweaked it to suit my needs and feel that those changes have positively impacted my trading. Add your own twist once you have figured out your comfortable trading ways.
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