Why Have a Trading Plan?

why have a trading plan

Why Have a Trading Plan?

 

The reason people are encouraged to have a trading plan is so that they have an increased chance of making money out of trading. Purely acting on uninformed hunches and what the taxi driver suggested may work occasionally, but in the long term this approach will send
you broke.

Trading can be exciting. It can be fun. It can also be very stressful. A Trading Plan, well written and strictly followed, will possibly make trading a little less exciting, a lot more structured and will reduce stress.

If these considerations are important to you, then read on.

The one aspect that separates amateurs and professionals in any field of endeavor is that professionals, especially successful ones, always have a process which they strictly follow.

Before you leap into the arena of trading, let’s just spend a moment on considering some of the harsh realities.

Chilling Facts

Most private traders lose money trading the financial markets, especially futures. Discovering why could be your first step to trading success.

A recent survey showed that more that 70% of active traders do not have a detailed, written trading plan encompassing:

  • Market analysis
  • Entry methods
  • Exit methods
  • Money management
  • Progressive financial situation review

This means most market participants can’t, or simply don’t, make disciplined trading decisions to take advantage of various market opportunities as they appear.
The survey also showed that those without a plan generally suffered from

  • Overtrading
  • Trades becoming ‘investments’
  • Gambling on hunches
  • Not making their own decisions
  • Not taking responsibility for their actions

Maybe you recognize yourself in this list?
If you know that your approach to trading has room for improvement, then we can help. If you don’t have a formalized, written trading plan, with an edge, then I know we have something to offer.

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