I want to address the issue of a plan. Far too many traders come into the market and have no plan at all, which would explain why most fail. I want to cover some critical aspects of a trading plan. Or, they think they have a plan, but its simply something written out that I want to make X dollars which is actually distracting, forcing you to focus on the wrong things.
I think the first part of your trading plan should address risk. The reason being that if you go broke you cant trade. So the first part of your plan should focus on how much you will risk on each trade, on each trade, each week, each month.
The next part of the plan should focus on which setups and markets you plan to trade. In what circumstance will you trade them? It should cover everything about the setup, how you will find it, when you will trade it, stop placement, trailing stop method, objective method, risk/reward criteria. Focus on finding the opportunities you identify.
You should have a plan for time managment. Trading takes a lot of time. There is a lot of homework. So plan on it. I spend 3 to 5 hours each night scanning, going over trades and gathering information.
Make sure you have invested in technology. You should have a computer with multiple monitors, a fast reliable internet connect *AND A BACKUP*, a broker and your office affairs in order.
Do not focus on making money. This is something that I see too much. When you focus on money, it distracts you. You should instead focus on finding and taking good trades, if you do that you wont be able to do anything but make money. Just have a plan and trade it.
Brandon |
