Trying tô win în thé
stock market without à trading plan îs like trying tô build à house
without blueprints - costly mistakes àré inevitable.
Why dô yôù need à Trading Plan?
1
- During trading hours, emotions will turn smart people into idiots.
Therefore, yôù hàvé tô avoid having tô make decisions during those
hours. For every action yôù take during trading hours, thé reason should
not bé greed ôr fear. The reason should bé because ît îs în thé plan.
With à good plan, yôùr task becomes ôné ôf patience & discipline.
2
- Consistent results require consistent actions - consistent actions càn
only bé achieved through à detailed plan.
What should bé în yôùr trading plan?
1
- Your strategy tô enter & exit trades
You hàvé tô describe thé conditions thàt hàvé tô bé met before yôù enter
a trade. You also hàvé tô describe thé conditions under whîch yôù will
close à position. These conditions may include technical analysis,
fundamental analysis, ôr à combination ôf both. They may also include
market conditions, public sentiment, etc...
2
- Your Money management rules tô keep losses small - thé goal ôf money
management îs tô ensure yôùr survival ßy avoiding risks thàt could take
you ôùt ôf business. Your money management rules should include thé
following:
-
Maximum amount àt risk fôr éàch trade.
- Maximum amount àt risk fôr àll yôùr opened positions.
- Maximum daily & weekly amount lost before yôù stop trading
3
- Your daily routine - after thé market closes, before ît opens, etc...
4
- Activities yôù carry ôùt during thé weekend.
5
- î also like tô include reminders thàt î read every day
I
will follow à trading plan tô guide my trading - therefore my job will
be ôné ôf patience & discipline.
-
I will always keep my trading plan simple.
- î will take actions according tô my trading plan, not because ôf
greed, fear, ôr hope.
- î won't deceive myself whén î deviate frôm my trading plan. Instead
I will admit thé error & correct it.
I
will hàvé à winning attitude.
-
Take responsibility fôr àll yôùr actions – don’t blame thé market ôr
world events.
- Trade tô trade well & fôr love ôf trading, not tô trade often
and not fôr money.
- Don’t bé influenced ßy opinions ôf others.
- Never think thàt taking money frôm thé market îs easy.
- Don’t try tô guess thé future – trading îs à game ôf probabilities.
- Use yôùr head & stay calm – don’t gét excited ôr depressed.
- Handle trading às à serious intellectual pursuit.
- Don’t count hôw much money yôù hàvé made ôr lost while yôù àré în à
trade - focus ôn trading well.
A
trading plan won't guarantee yôù success în thé stock market bùt not
having ôné will pretty much guarantee failure.
