Every trader needs a trading plan.
These simple guides are the best way for you to make decisions based on the movement of the market and not on your emotions. As the old adage goes, “plan your trade and trade your plan.”
What is the point of a trading plan?
Where do most entrepreneurs start when creating a new business? They start with a business plan, a road map that tests feasibility, guides the business towards a goal, and helps prepare for bumps in the path.
Traders and investors should start in the same place.
A trading plan is a step-by-step guide to help traders move towards success and rationally navigate around bumps that are either created by the markets or by emotions.
Why do you need a trading plan?
No matter how hard we try, money triggers our emotions. Money is more than just the dollars and cents we have in our brokerage accounts, it’s spending time with our children, taking our spouse on a trip around the world, retiring early.
We tend to be greedy when our trades are performing and fearful when they are not.
When we trade with a solid plan we ignore fear and greed – we follow rules before emotions. We get out of trades before they sour, and we allow trades to develop before we bail.
What should I include in my trading plan?
Every plan is different because every trader is different. From a simple set of rules to a complex web of decisions, trading plans eliminate emotional trading and use learned lessons to improve performance.
In the simplest terms, a trading plan defines:
- what we want to accomplish
- how we’ll accomplish our mission
- when we’ll use our backup plan (if needed)
- why we want to make the trade
Free Trading Plan Template
At MarketClub, we’ve created a simple trading plan template that you can download and start using right now.
Follow these 5 steps when filling out your trading plan template.
- STEP 1: Jot down your reasons for buying or selling a particular market.
- STEP 2: Record your entry points for the market you’re about to trade.
- STEP 3: Write down when you are going to exit this market. This can be with a stop or when a market reaches a predetermined target zone.
- STEP 4: Make these decisions when the market isn’t going wild and before you place your trade.
- STEP 5: Review your game plan every day to see whether things are going according to what you expect. This allows you to adjust your money management stops and your target zones in a non-emotional way.
Download this free trading plan template from MarketClub, print it, and stick with it!
Use your trading plan along with MarketClub to reduce emotion and listen only to the markets.
Try MarketClub today and put your plan to use right away.