Why Make a Trading Plan?
By all means read the proliferation of professional trading advice out there in forums and blogs - BUT BE YOUR OWN TRADER! Develop your own trading plan and update it as you gain more experience and stick to it. As we've seen in Module 7. Managing Money, Exposure & Risk, rock solid discipline is a must in trading - deviate and you can loose money.
So why develop a trading plan? Treat Trading like a business, so your trading plan is your business plan - Your risk tolerance, psychology, expectations and trading system are all enveloped in your trading plan. A trading plan should take the emotion out of trading. It's a flow chart detailing every possible issue thrown at you, guiding you to the correct answer - A plan simplifies decisions. It's 'hard and fast' rules are:
If you fail to make a plan you will fail as a trader. First, you won't be able to make split decisions thus avoiding large losses and second you won't know where you're going wrong if it all goes pair-shape. We can't emphasis this enough - MAKE A PLAN and WRITE IT DOWN!!! You'll then have a better chance of making the law of averages work for you.
So What's in a Trading Plan?
Below we'll look at some of the things that should be put into a trading plan. Modules 1 through to 9 have focused on these already, so you should have a good understanding of what's in your Plan.
So get yourself organised! Do it Now! You may not have all your preferred system details sorted yet, but that's OK. Just write what's been done so far. Update it when you work it out. Once you've written your plan you may find holes in places and you may want to add your own points - by all means, record them. The most important thing to remember is make it "real" & "honest" and once completed, stick to the plan.
Technical analysis is not an exact science and although these ideas can increase the probability of making the correct trade, many will go against you and large losses can be incurred. Your own trading strategy needs to be formed and hopefully you'll be on your way to achieving this on completion of this course. <<<<<<< HEAD