Why is it important to have a trading plan?

Posted By Robert On Wednesday, January 15th, 2014 With 0 Comments
  • Is your strategy planned well in advance?
  • Do you isolate yourself from the opinions of others?
  • Do have a set of criteria that must be met before you buy?
  • Do have well thought out and tested rules for when to sell?
  • Why have a strategy?
  • Most don’t.
  • Removes subjectivity.
  • Allows diversification.
  • Most are available for free.
  • Be invested.
  1. Select your investment universe (either markets or stocks)
  2. Appropriate account size (capital that you can afford and allow for diversification).
  3. Have an entry rule (eg. 21 day break out)
  4. Add risk management parameters stop loss (fixed dollar, trailing, swing)
  5. How much to risk ( % based on capital)
  6. Back test the system as well as forward testing
  7. Performance measurement
  8. Determine your expectations
  9. Determine your necessary requirements (resources to get the job done)
  10. When should I start trading (paper trading first)
  • I will not trade on open
  • I will not trade on tips from others
  • I will not hold a position past 8pm – no matter what.
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