Constructing a Robust Trading Plan
Unlock Your Trading Potential: Steps to an Effective Trading Plan
What is a Trading Plan?
A trading plan is a one-page blueprint to your trading process. It can be created as a simple PDF, a .doc file, a spreadsheet, or by using a trading plan software like Trading Plan Pro.
What should I include in my Trading Plan?
A well-crafted trading plan should define your trading “edge” or your unique approach. It should also outline your risk parameters, the instruments you’re trading, and the time allotment for various activities like executing trades, studying the charts, reviewing the outcomes, and analysis.
It should also have your current trading strategies and the mindset habits that help you maintain focus. You also need to include your other processes, including the necessary checklists and alignment exercises. Finally, a successful plan also identifies a single aspect of your trading that currently requires the most attention.
Things to avoid when crafting your Trading Plan
Don’t make the mistake of squeezing every trading secret you know into the plan.
It’s not a detailed strategy, a checklist, or a trading journal – these are all different parts that should be included in your trading toolbox. The benefit of keeping all these separate is it allows you to focus on what needs improvement the most.
Keep your Trading Plan neat and focused on the core areas. Avoid common pitfalls such as overloading your plan with too much information or altering your plan impulsively when you think it’s not working.
Final Thoughts
Remember that a good trading plan is a map that will lead you to your trading goals.
Just continue to build your plan, stick to it for at least 30 days, then reflect and adjust. Keep it focused, keep it flexible, and you’ll be on the right track!
If you want to go deeper on this topic check out how to create a trading plan.