Every successful business needs a business plan
Every successful business needs a business plan. In the same way, every trader to be successful must have trading plans. Having a trading plan removes the emotions from decisions made during trading. It defines what your responses are going to be at any point during a trade.
You might wonder why a company as big as IBM can almost always guarantee its success every single year? This is mainly because everything that they do or needed to do have been carefully laid out through their established plans and systems. It includes all the details that their employees have to follow to ensure the smooth flow of their services: from hiring people to selling their products and services.
A business is a business no matter from what angle you look at it and one thing is for sure, you would not want to invest a huge sum of money in it unless you are very sure of its success. And to do that you have to understand its business plan so you will have a good idea how it will be operating, whether it will work or not, or if it has a huge potential for growth.
The problem with a lot of traders, particularly the new ones, is that they do not treat their trading activities as a business and therefore they do not even have their own trading plans. A well thought out, well documented trading plan is the key to success. A good guide as to whether this is a solid plan is to write it out and then give it to someone else to read. If they are able to understand it and to go through it with a minimum number of questions, you can rest assured that you have completed a competent trading plan.
When you write your own plan you must remember that everything that is written there and that happens are all your responsibility.
This is because of the volatile nature of of the stock market or whatever market you may be trading. Keep in mind that there should be three areas that any trading plan must cover.
The first one is that it should have entry rules that have been thoroughly tested.
The second one is that the rules can be applied on any tradable instrument.
And the third one is that these rules must be easy to understand and follow.
Do you have your exit rules clearly defined in your plan?
If you have entry rules it is therefore also important that you know when to exit a trade. This is because it does not make sense that you know when to enter a trade and yet you do not know what are the criteria you should be looking out for to know that you have achieved all that you can from that trade, whether it is a winning or losing situation. If it is a losing situation then at least the goal is to minimize your losses.
Do not let it bleed as they always say. And last but not the least, the need for a very strict money management is of high necessity especially if you know your assets for your trading are very limited.
Again, this is to help you minimize your losses. These are the important things you need to consider when you are creating your best trading system.
All trading plans must be well thought out and that you should be the one to devise your own.
You might wonder why a company as big as IBM can almost always guarantee its success every single year? This is mainly because everything that they do or needed to do have been carefully laid out through their established plans and systems. It includes all the details that their employees have to follow to ensure the smooth flow of their services: from hiring people to selling their products and services.
A business is a business no matter from what angle you look at it and one thing is for sure, you would not want to invest a huge sum of money in it unless you are very sure of its success. And to do that you have to understand its business plan so you will have a good idea how it will be operating, whether it will work or not, or if it has a huge potential for growth.
The problem with a lot of traders, particularly the new ones, is that they do not treat their trading activities as a business and therefore they do not even have their own trading plans. A well thought out, well documented trading plan is the key to success. A good guide as to whether this is a solid plan is to write it out and then give it to someone else to read. If they are able to understand it and to go through it with a minimum number of questions, you can rest assured that you have completed a competent trading plan.
When you write your own plan you must remember that everything that is written there and that happens are all your responsibility.
This is because of the volatile nature of of the stock market or whatever market you may be trading. Keep in mind that there should be three areas that any trading plan must cover.
The first one is that it should have entry rules that have been thoroughly tested.
The second one is that the rules can be applied on any tradable instrument.
And the third one is that these rules must be easy to understand and follow.
Do you have your exit rules clearly defined in your plan?
If you have entry rules it is therefore also important that you know when to exit a trade. This is because it does not make sense that you know when to enter a trade and yet you do not know what are the criteria you should be looking out for to know that you have achieved all that you can from that trade, whether it is a winning or losing situation. If it is a losing situation then at least the goal is to minimize your losses.
Do not let it bleed as they always say. And last but not the least, the need for a very strict money management is of high necessity especially if you know your assets for your trading are very limited.
Again, this is to help you minimize your losses. These are the important things you need to consider when you are creating your best trading system.
All trading plans must be well thought out and that you should be the one to devise your own.