What is Your Trading Plan?
What is Your Trading Plan?
Written by The Millennial Trader
Before you do anything in life, you must have a plan to get there. You can’t move from A to B, beginner to expert, or amateur to professional without transforming your idea into action—stock trading is no different. If you want to work from home as a trader, you need to build your plan first.
A trading plan is a roadmap and a requirement for beginner traders. This plan is a systematic method that can withstand the constant fluctuation of the market and give you trading security. Consider all possible variables for your trading plan to be successful, which will inevitably require several instances of trial and error. You can’t simply drive for miles ahead without knowing your destination or even if you are even going in the right direction. Like a map, a trading plan must be created and looked at so you know where you want to go and how you intend to get there.
Your plan will take time and energy to create. It should be well-researched, inalterable, and feasible, given your schedule. Have the intention of sticking with your plan. Follow your trading plan carefully until it stops working for you and needs adjustment. You can’t be impulsive or emotional. You must have a more fixed mindset to become a stock trader.
The beautiful thing about trading is that no two trading plans are the same, just as no two stock traders are the same. Once you think you’ve done the research, you can start making some decisions to formulate your plan. First, decide what kind of trader you are in terms of time-frame. You may want to be a day trader, buying and selling several stocks throughout the trading day and exiting all positions at the close. Or, a swing trader who chooses to sell several stocks over a larger time frame (anywhere from two days to two weeks). Once you decide which style fits best for your schedule, you can start getting more creative with your trading plan.
Next, start evaluating your risk levels, knowing when you should pull back and take a break and when you should take the risk. This knowledge will come from experience or trading simulators and lessons you learn along the way, so it is imperative that you keep track of your entry wins and losses for this reason. Once you have established your risk/reward level ratio, start setting goals. You can begin by setting weekly, monthly, or annual profit goals, that way, you keep yourself accountable and focused.
Plan on including at least three months of simulation and practice. Otherwise, you’re just giving away your money. Your trading plan will not bear results if you don’t put in the effort. Whether you want to be a day trader or a swing trader means nothing if you’re not willing to put in the hours of practice. Fortunately, this practice is delivered on a silver platter at Trade Ideas with our state-of-the-art A.I. trading simulator. You must test your strategy to ensure its validity and reliability before investing real money. A good trading simulator will be your best friend until you feel confident enough to take it to the market.
The link below is an online trading journal for you to keep your daily trade now: https://www.tradervue.com/site/trading-journal/
To clarify, a trading plan doesn’t guarantee you money in return, no matter how solid or well-tested it may be. However, it gives you reassurance and the support you need to get back on track when the market eventually takes a turn. A trading plan is there for you, so you don’t have to start from scratch, but you may need to make a few adjustments/improvements and go back to the simulator for a bit.
A good trading plan alone won’t be enough to make you a great trader. The best traders have a solid individualized plan before entering the market. However, they also know how to control their emotions when things go south. They accept and understand they can’t win every battle, but they know how to keep their emotions in check to have a fighting chance. Emotions will always run high when trading stocks, no matter your trading plan. Stock trading is not for the faint of heart. It takes a combined effort of persistence, dedication, practice, patience, and resilience to build an exceptional trader.
If you’re not sure you have or intend to work on these traits, reevaluate your trading goals. You only get out of trading what you put in. If this sounds manageable, start creating, workshopping, and practicing. your trading plan today. The time has come for you to start consistently treating trading like a business, not a casino if you want to be a winning trader yourself.