Having a trading plan adds another layer of discipline, which is one of the most important aspects of trading. How much money have you lost on a crazy impulse trade for a share which you thought couldn’t possibly go any lower?
What should this trading plan contain? There is really no fixed format, but in order to give you a head start on the things you should consider including I am happy to share my classification with you, as follows:
· Profit Goal
· Position Sizing
· Daily Trading Plan
· Stop Losses
· Open Positions
· Emergency Back-up Plans
· Record Keeping
This is not meant to be an exhaustive list, but this plan is better than more than 50% of other traders out there, because they don’t have one at all!
If you haven't yet found your perfect trading system, please check this one out!