September 14, 2015 at 5:49 pm
Most traders get lured into Binary Options trading due to the simplicity surrounding it. All you have to do is choose whether the current market price will be higher or lower after a predetermined amount of time. Due to binary options’ simplicity, traders think that they do not need a trading plan. Trading is a business, so you will need to treat it as such to succeed. Every successful business or entrepreneur has a business plan and so should your trading. There is an old saying: “Fail to plan and you plan to fail.” Creating a solid Forex trading plan is one of the most important steps a trader could take in his/her career. If you already have a written trading plan, congratulations! You are in the minority. While it is still no guarantee that you will make money, you have eliminated one of the major problems.
Having a plan is crucial when you want to survive in the trading environment. It is your blueprint to become a consistently profitable trader. The plan gives you instructions on how you should handle each trading situation that you will face. The primary benefit of a trading plan is that you can monitor your results and see what works and what doesn’t. Random trades you take won’t provide you with any valuable feedback, because your winners and losers will be as random as the impulses were to take the trade. Following your plan will allow you to evaluate which strategies work and make the necessary adjustments to improve.
Most people have a misconception that a trading plan has to be long and complicated. Other traders think that they can just spend a few minutes on creating a plan to simply check it off their list. The truth is that you need to invest a good amount of time to create a plan that will be worthwhile. Your trading plan will change as time goes on because of market conditions, your skill as a trader and your portfolio size. When you are creating your trading plan, you should take into account your personal trading style and goals. You should refrain from using someone else’s plan because it does not reflect your trading characteristics.
Before you begin to create your trading plan, you should ask yourself the following questions:
Creating a master trading plan will take time but it will be worth it in the end. The plan should be very detailed and should at least incorporate all of the above points. You will have to adjust your trading plan every now and then, because you will come across things you didn’t consider beforehand. Once you are happy and your plan is profitable you should avoid tinkering with it. The whole idea of the trading plan is to make your trading systematic, so you see what works and what doesn’t. If you keep on making changes to the plan, it won’t have time to show you if it is really working or not. A Trading plan is only as good as the trader’s discipline therefore it is vital that you stick to your plan. What are you waiting for? Start your trading plan today and become one step closer to being that successful trader you have always dreamed of!
September 14, 2015 at 7:05 pm
Hey man great stuff, I actually have a very detailed trading plan but I struggle to stick with it. I heard that some people use trading journals to force them to stick with their trading plans. I want to ask you what your opinion is regarding trading journals. Is it worth the time and effort? Do you have one?
September 14, 2015 at 8:23 pm
Deandre, funny that you would ask me about trading journals. I am actually busy with an article about trading journals as we speak. In my opinion, you NEED to have one to succeed in the trading game. There’s no way around it. Having a trading journal is like having a personal trading mentor. If you don’t have one yet you should definitely start it as soon as possible.
For the other people that are reading this – you first need to create a solid trading plan before you can move on to creating a trading journal. Build the foundation from the ground up and not from the roof on down.
September 14, 2015 at 9:03 pm
I have recently created a trading plan, but it looks like it still has a lot of missing pieces if I compare it with this article. Also, I’m looking forward to reading your trading journal article! Always quality stuff from you 😉
September 15, 2015 at 10:17 am
Great informative article, Alex!
I have always heard people talking about trading plans, but I never really knew what it consisted of. This is very detailed and it will definitely help me to create my own trading plan! I’m still a newbie as they call me, so I will probably struggle to get it right the first time.
August 29, 2017 at 9:03 pm
That is very important, discipline matters very much. Following to the trading plan makes you sure that everything is under control and you are more confident while trading. Hence your results became much better.
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