Trading Plan/Reasons to Trade

Happy Thanksgiving, :)

I want to talk a little bit about a trading plan this morning. Going to try and keep it short since its a holiday.

I cannot emphasize enough how important a trading plan is. as the saying goes "if you fail to plan you plan to fail" I can almost guarantee you will fail if you don't have a trading plan. Whether you trade part time, full time or your a swing trader, position trader, or scalp trader. YOU NEED A PLAN.

The things you need in a trading plan is as follows:

What currency pairs you will trade.

At what times will you trade those pairs.

What sessions of the trading day will you trade.

Daily trading audit that goes over the trades you did the day before.

A daily checklist of things you will do prior to entering a trade

(You can also create a mini plan that is a plan for each trade i will talk about this later on)

You need to understand what fundamentals will move the market each day (a morning briefing)

Create a daily, weekly, monthly and yearly profit loss limit. (notice i said profit, Yes set profit limits that will create consistency. You won't have the desire to trade more then lose)

Set a risk level, how much money will you leverage on each trade. No more then 10% is typical risk level.

Create Entry rules. How will you enter a trade? always look at Technicals and Fundamentals together.

Keep records of your trades, Most platforms these days have a profit loss statement. I personally do it buy hand using an accounting book i got at staples. You will understand your daily winnings and losses more. You can go a step further and print out all your winning and loss charts using screen hunter or a similar program. it will give you a visual aid.

Last, just like the morning briefing do a nightly briefing that goes over wins and losses.

Now i want to talk about the reasons to trade. I personally don't trade just to make money. I have to admit though. When i first started trading I was just interesting in making money, and guess what? I lost my ass. This may sound weird but trading isn't all about making money. Trading is about learning the market, trends and behavors of other traders. If you don't have the desire to learn about Macroeconomics, fundamental analysis and technical analysis. You won't win in trading. You will always lose.

I hope everybody has a safe and happy thanksgiving,

Thank You

JP