A trading plan is a simple document you have created to guide your trading journey everyday. A trading plan is your rule book for successful trading. You have to create your own trading plan for the true north in the stock market. Keep it simple, and more importantly follow it rigorously.
Include the following 6 easy steps to craft your trading plan. Perrsonalize it to your trading/investing style.
1. Start with a positive quote or something that gets you motivated and excited
2. Daily trading goal
3. Daily trading strategy
4. Trading Qualifiers
5. Time Window Strategy
6. X-Y-Z goals
Read your plan before trading each day. Do it every single day.
Sample trading plan
1. I can’t change the direction of the wind, but I can adjust my sails to always reach my destination – Jimmy Dean
2. Daily trading goal: $150.00 per day
3. Daily trading strategy: Buying qualified support and selling qualified resistance after strong buying/selling signals are presented by the market. No overnight positions.
Price range $10 to $50
Volume minimum 400,000
Swing Trend: Closes above/below swing points
5. Time Window Strategy: Two trade per hour on average with the goals of trading for 3 hours per day and hitting or exceeding the daily dollar goal.
6. X-Y-Z goals
$150 per day
$750 per week
$3000 per month
In every trade lies great possibility. Build a strong trading foundation by downloading the above trading plan and personalizing it for your trading.
A critical aspect of trading that is often overlooked by most is managing risk i.e. losses. It’s against human nature to lose or even think about losing. We live our life in the realm of winning all the time. And that is how it should be. But in trading losing sometimes is as good as winning. Therefore, you should have a good stop loss strategy as part of your winning trading plan.