Creating Your Trade Plan 7. 📋 TRADE PLAN Trading Plan -> your systematic approach to trading your defined edge in the market with entry, exit, and risk management rules. Read your plan before, during, and after every single trading session. Plan the trade, trade your plan. Your first draft will be very rough, but you need a starting point in order to begin the process of testing and refining your strategy before you can begin trading it live. Don't let 'perfection' be an excuse for procrastination. Your eventual goal is to have 2 documents: 1. Simplified trading plan 2. Flow chart diagram detailing the full end-to-end process of your strategy At the start, it can feel like there are a lot of moving parts to the strategy. The complexity of your approach initially can give you the knowledge that is required in order to eventually be able to execute a 'simple' plan perfectly -> unconscious competence. A 'simple' elegant trading plan is what will lead you to achieve consistent results. But to get to that level of simplicity, first, you need the deep understanding that comes from the initial complexity. (So don't worry if your written trading plan is a little long at first, you will eventually boil it down to a few key sentences). Trading Plan Contents Have these 3 key components included as the bare minimum: ENTRY -> how will you enter the market? EXIT -> how will you exit out of the market? RISK -> how will you manage your exposure to the market? You can add other sections such as but not limited to: Entry model(s) diagrams Entry model(s) examples Session times Pair(s) you trade Pair specific rules Asset class(es) you trade Defining Your Trading Personality Trading is an individual sport. Ultimately the responsibility falls on you to press buy and sell. Becoming an independent and consistently profitable trader will require you to build, develop and evolve your trading plan into something that is unique to you. Avoid becoming a jack of all trades, master of none. To truly reap the benefits of one strategy, you have to sacrifice the others. The most efficient way to first know what trading style you should specialise in is by defining your individual trading personality. 1. GOALS -> what are you trying to achieve and why? Do you want to be a full-time trader? Do you want trading to supplement your job/business? Do you want to trade and travel? It's common to want the result, but not the lifestyle (routine) that result requires. 2. CURRENT LIFESTYLE -> what are your current time constraints and commitments? What timeframe can you enter on? What timeframe can you manage on? How often will you have internet and/or chart access? What timezone are you in? Design your trade plan around a style that will be the most sustainable for your current lifestyle. 3. TRADING HISTORY & JOURNEY -> what is the good, the bad, the failures, and the lessons? Look for repeat patterns and commonalities How can you do more of what's working & less of what isn't? What rules can you implement to avoid repeating failings? 4. PSYCHOLOGICAL BLOCKAGES -> what's holding you back, why, and how will you overcome it? What is the problem? Why do I have this problem? What can I do to solve it? The more reflection, self-review, and contemplation you perform as a trader, the quicker you will progress. ❌ PROBLEM:My journal showed nearly every time I took more than 3 losses in one day, my results would suffer. 🤔 WHY:Overtrading and taking invalid trades due to trying to make back losses that day. ✅ SOLUTION:New trade plan rule -> Maximum 3 losses per day. Simple solution -> massive long-term improvement. It’s okay to make human error. It’s not okay to do nothing and let it keep happening whilst expecting different results. Find the problem, find the why, fix it! Steps 3 & 4 will be performed for when you are refining and improving your already established trade plan. Creating a trade plan that is individually tailored to you will massively increase your adherence to your rules, which will decrease your performance discrepancy (the difference between your strategy results and your actual results) and therefore increases the probability of achieving long-term success.
