Some traders believe that there’s no need to set out a trading plan. They think that you can earn money and trade with no strategy whatsoever, just by using your intuition. And we’re always stunned by such an approach.
In this article, we will highlight 4 examples of how having a solid trading plan can make your trading easier and more efficient. Don’t you want to trade like a pro?
1. A trading plan gives you certainty
When you sit in front of the screen, looking at the rapidly changing quotes in your trading platform, do you sometimes find yourself wondering: “What will I trade today?”, “Which position should I open?”? If you do, you are lacking certainty. A trading plan solves this issue.
Scheduling always beats the lack of a plan. Compare two traders:
- The first trader does the same thing over and over again: he opens his trading terminal and tries to find a trade that looks potentially profitable.
- The second trader sits down at his desk and goes over his trading strategy – he already has a plan, tasks to complete, ideas for improving his trading journal, etc.
Which trader do you think will reach his goals faster?
Speaking of goals:
Having a plan keeps you focused on the important stuff. Any independent activity where no one controls you and you work for yourself to earn money is basically self-employment. Trading can be also considered such an activity.
Goal setting is essential if you want to succeed. Writing down your goals is important for two reasons:
- It gives you a general direction.
For example: “I want to make 75% of profitable trades.”
To achieve this goal, you need to focus on the quality of your trades – constantly record them in your trading journal and analyze each of your transactions.
2. Having a goal keeps you focused and dedicated
Sometimes you want to do everything at once:
- Make money on rising bitcoin
- Learn how to trade the yen
- Invest in stocks
- Open a savings account at the bank
But usually to achieve these goals you have neither time nor the resources.
When drawing up your trading plan, you don’t just set goals. You set priorities and explain why some goals in the first place and others can wait.
3. The plan reflects your progress and keeps you motivated
Nothing makes you want to work harder and gives you motivation than seeing how far you’ve come and how much you’ve already achieved. Looking at your progress is always very inspiring.
No wonder newbies buy fitness trackers to stay on track. When you first start, it feels like you’re moving nowhere. But when your progress is visualized through charts and graphs, it keeps you motivated and persistent.
So when you develop a trading plan, the first thing you should do is create the “goals” and “progress” sections.
Yes, now you are investing 20-30 minutes in planning. As you start to lose your enthusiasm and motivation, the time and effort you put in will keep you going and these 20-30 minutes will pay off big time.
4. Planning allows you to create a daily routine and free up your time
This is the greatest perk of having a trading plan. A trading plan can work miracles, believe us. When you have a daily routine, you don’t get distracted and waste your energy on small unimportant things. When you step away from the chaos, you start looking at your goals clearly. When everything is in order, you have more time left for self-study.
To recap, a trading plan gives you direction, keeps you focused on important goals, and shows progress. Now imagine how much extra time a person would spend without it?
When you know what to do, how to do it and how much time you have, you’ll move toward your goals and objectives faster. All you’ll need to do is to test and improve your trading system and watch your indicators and your profits grow. What could be better?
To make the most of this article, do yourself a favor. Take a pen and a piece of paper, go over the 4 tips we’ve shared in this article. Now, answer these questions:
- What time do I usually trade? What do I usually do?
- What are my goals? What do I really want from trading? (even if it’s just making money)
- Do I sometimes feel a lack of discipline? Are there any boring tasks I would like to get rid of?
- What do I do when I lose motivation?
Write down the answers and think, what you can do to change your trading and life for the better.
If you change nothing, you’ll keep getting the same results. Do you want to be a professional trader? Act like one. Start taking your trading seriously, stay focused on your goals and track your progress. We wish you the best of luck!
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