A trading plan

Why do you need a trading plan?

A trading plan is necessary because it helps you make decisions in cold logic and define the parameters of your ideal trade. A good trading plan will help you to avoid making emotional decisions in the most critical moments. The benefits of a trading plan include:

  • Easier trading
  • More objective decisions
  • Better trading discipline
  • More room for improvement

How to create a trading plan

  • There are seven easy steps to follow when creating a successful trading plan:
  • Outline your motivation
  • Decide how much time you can commit to trading
  • Define your goals
  • Choose a risk-reward ratio
  • Decide how much capital you have for trading
  • Assess your market knowledge
  • Start a trading diary