This is really a no brainer. If you want to achieve success, consistent success, in this game you have to have a plan. It is similar to everything else in life. No matter which market you trade be it Futures, Commodity or Currency, you need a trading plan.
Trading has to be goal oriented. You need to set goals and a pragmatic trading plan is what helps you achieve those goals, day in and day out. Notice, I have used the word “Pragmatic” here. I have seen many new traders as well as some seasoned ones who set unrealistic, impractical goals while trading. Most newbies start with small accounts and hope to double/triple their capital every year. It is good to be optimistic but merely being optimistic is not going to make you any money in this game. You have to be cautiously optimistic. Don’t try to bite more than you can chew. Newbies keep making these mistakes and are washed out sooner than they realize.
A trading plan should reflect the personality of the trader. I cannot stress more on this! No trader is the same. What works very well for me may lead to losses for you. You can have a simple 3 step Trading Plan or any elaborate one which takes into account every nitty gritty. A simple 3 step plan would include how to get in, how to manage the trade (via SL/Trailing SL) and when lastly, when to get out. Whether you have a simple plan or a more focussed one, YOU HAVE TO HAVE A TRADING PLAN. Without it, I guarantee, you won’t last long in this game.
What is even more important than having a plan is to follow it to the tee. Once you make a plan and take it live you have to adhere to all the Trading rules in it. That is how it works. A Postit note which shouts “FOLLOW YOUR PLAN” should be stuck on every trader’s terminal. Many traders fall prey to the idea of overriding their trading plan based on gut instinct. Let me tell you this, you might be right ocassionally, but you are going to be very wrong in the long term. Trading is a long term endeavour, unless it is a pursued as a hobby in which case it will cost you a lot of money.
All this eventually boils down to the core principle of Discipline. You have to have the discipline to follow your plan. You cannot keep changing it every now and then. The formulation and execution of your Trading Plan will reflect and determine your trading success.
Every 6 months or so conduct a review of your trading plan. Add some news rules or delete some depending on your experience. Trading is a continously evolving occupation. You have to keep thinking, keep improving, keep adding to it. It is a a never ending catharsis of human psychology.
Remember : Your Trading Plan should reflect the kind of trader you are. Make your own plan. Do not copy someone else’s plan as that is a sure shot recipe to failure.
If you are a trader and do not have a Trading Plan, NOW is the time to make one. It will go a long way in making you a very competent trader. One of the things I help traders in my Boring Trader Course is how to make a trading plan which suits your personality. If you need more info on The Boring Trader course do email me at firstname.lastname@example.org. Alternatively, you can click on the Services tab to the left.
So go ahead, Plan your Trade and Trade your Plan!
To your Boring Success!!