Trading Plan Essentials

April 16, 2018

 

The saying “ only the strong survive” is never more true than with trading. With that said, in all its harshness, there is a way to successfully navigate through the trading jungle. Like anything in life, a solid system that is understood and followed will lead us to success and trading is no different. The challenge many new traders fall victim to, is not understanding how to cut out a lot of the markets noise.  It takes an experienced Trader to cut through the noise and find success simply by following a system in which opportunities come to them. They do not chase trades and under no circumstances do they push trades based on their own opinion. They simply follow a criteria that they know (through back testing) works more often than not.

 

Simply put, successful and consistent Traders use a trading plan to navigate the markets. It’s in those trading plans that there are rules that are to be followed that are backed by discipline. A trading plan in this game is a  non-negotiable, a must have. Now, they don’t have to be anything over the top or complicated. They simply have to state guidelines that you follow before trading.

 

For example, a solid trading plan will list particulars such as:

  1. The type of Market Cap’s you’ll trade

  2. Whether you’re a Day/Swing trader

  3. Indicators you’ll use

  4. Time of day you’ll trade

  5. Patterns you’ll trade

 

The goal of a trading plan is to keep you focused. It’s a system developed to cater to your personal attributes and your view/understanding of the markets. This may sound common sense but it’s startling as to how many people don't actually have or use a trading plan. In my opinion, it is irresponsible to enter a trade that doesn't follow some form of a system that's been tested for success. Trading is very much a science and an art. The science portion is the trading plan. It’s understanding that there are systematic guidelines that must be followed before.

 

Trading, at its core is suppose to be boring. It’s a simple business in which you know what to do and when. You manage your downside first and look to make profits second. All this is achieved through a successful, well tested, trading plan.

 

So if you happen to be part of the crowd that has not developed a trading plan, I urge you to take  a moment to think about what you’re actually doing. Think about the dangers that the markets and it participants present daily. Think about what could possibly happen if you don't tighten up your profile and start using a trading plan. My hope is that you employ a trading plan moving forward. That will help cut out market noise and assist in mitigating unnecessary risk. My responsibility as a market participant and trading mentor is to continuously work with the trading community and work towards a situation in which new traders are given the tools to thrive in the markets.

 

I’d like to offer you this gift! 

Video : How to develop your trading plan and a downloadable template to help you make your own.

 

Remember, a good trading plan that is followed with a high level of discipline  is the foundation in which your trading career is built on!

 

-Julian

 

 

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