Subscribe Feed (RSS)Without a doubt this is the most important part of trading. No matter what instrument you’re trading, no matter what strategy or how much you’re trading. If you don’t have a trading plan, chances are you won’t be successful.
A trading plan is the roadmap or set of rules that define your trading. A good trading plan should include these elements:
- The specific instruments you’ll be trading
- The strategies you’ll be using
- The entry and exit signals including your profit or loss targets
- Your trading times and importantly when you won’t be trading e.g. 15 minutes before news announcements
- Your total trading bank and the maximum allowed per trade
- Emergency contact numbers for your Broker’s desk (in case you lose your internet connection)
In addition to your trading plan, you should always capture details about the trade you take. You should capture:
- The instrument you traded
- The date & time
- The strategy and entry signal
- The price and profit or loss
- The emotions you experienced during this trade
- A screenshot of your charts
- Any other metrics to help you analyse your trade performance
Analyse your trading performance regularly and with this modify your trading plan to maximise your returns.
Developing your trading plan can take some time because you need to test your strategies and signals using your trading style. You can do this using a live simulator (most trading platforms provide this facility) and execute trades over a month or two.
Alternatively you can accelerate this process by using an historical simulator such as this one stock market simulator. With this simulator you test your plan very quickly using real historical stock data. It can save you heaps of time and effort.
