Creating A Trading Plan
You have probably heard traders say time and time again, that 90% of trading is in the mind. Well this is absolutely true, and one way of helping you keep the prime ‘trading mindset’ is by creating a trading plan.
Before I began using a trading plan, my trading was ALL OVER! I would trade a few days, get good results, then have a losing day, and go on a complete bender, revenge trading, until I had lost my weeks progress! It was a very vicious cycle, which it took me almost 4 months to get out of!
It was when I decided to take my trading career seriously and work on my mindset, that the need for my trading plan became clear.
What Exactly Is A Trading Plan?
A Trading Plan is a tool you use, that not only tracks your progress, but it also gives you a visual representation of how far ahead of schedule you are, and stops you from getting into bad trades.
For example, I aim for 1% growth per day. (Put your starting balance and 1% per day growth into a compound calculator and see where that gets you over a few short years!) Because of the way I trade (precision entries and very tight stop losses) this equates to around 5 pips per day.
Now, don’t get me wrong, the majority of trades I enter, will get me more than 5 pips profit, but, if I am in a trade aiming for 25 pips profit, and it happens to turn on me and I get out with 5 pips in hand, that’s all good with me!
So, at the end of each day when I finish trading, I mark it on my trading plan spreadsheet. Most days I gain more than one day worth of growth, which puts me ahead of schedule. Some days, I gain one days growth which is cool by me, and on odd occasion I lose – BUT, because I am ahead of schedule on my plan, I don’t freak out, I don’t revenge trade and I don’t get the horrible, niggling feeling in the back of my mind!
So Here’s The Rules:
- Mark Off Your Trading Plan Every Day When You’re Done Trading.
- When You Hit Your Daily Goal – STOP TRADING (It’s a marathon, not a sprint!)
- If You Lose A Trade – STOP TRADING (Take a break and let your mindset re-align!)
It really is that simple! Having a clear cut trading plan will seriously help you on your path to success!
How Do I Create A Trading Plan?
So you’re sold on creating a trading plan, but how do you do it?
Well, first of all, you basically have free reign to be creative here, what works for one, will not necessarily work for another, but I have included a video below on how I create and utilise my trading plans. I hope this helps!
If you would like to learn more about trading mindset, I can absolutely recommend the book ‘Trading In The Zone‘
Once you have your plan in place, you may also want to check out our Strategies guide, to find a strategy suitable for you. Remember to test all strategies on demo before going live!