Thanks to those who are posting charts. I’ll learn to do that someday, hopefully before Tymen returns so he won’t make fun of me :o So please continue posting charts of your good trades and even of your bad ones too. It really helps newer traders to learn about trend trading.
We had a fantastic trading day in the chat room. I think everyone made lots of good pips. We discussed lots of things, but one was the necessity of a trading plan.
This is all old hat to experienced traders, but for new traders it may be quite shocking to learn they will probably never be successful in Forex without a trading plan and the discipline to trade by it. The reason is simple, almost no one starts out as a great trader. I certainly didn’t. You have to learn to be a good trader, but you will learn very little without a good trading plan and the discipline to trade by it.
To say it another way, the way you improve in this business is to write a plan, trade by it for a while, improve the plan, and repeat as necessary. A horrible plan is better than no plan at all, because at least it can be improved. No plan means no progress, you just keep doing the same things hoping eventually something will change. Here’s a clue, it won’t. Write down a plan. Trade by it without deviation or exception. Improve the plan, repeat as necessary. The easy part is writing the plan. The hardest part is trading by it without deviation.
If you don’t trade your plan without deviation, and you lose, you will never know if it’s your plan that’s messed up, or if it’s your discipline that’s lacking. You can go round and round like that for precious months or years like I did. You have to fix one or the other to make progress. It’s a simple fact that you can’t improve your plan if you aren’t trading it. So you have to fix your discipline first, so that you can trade your plan, so that you can improve it.
If your problem is having the discipline to trade your plan in the first place, here’s something I did to get it down quick. OK, it’s silly, but I was taught this when I first started trading and it worked for me. I don’t mean to be mean, but my point is you MUST find something that works for you or you will never make in this business.
OK, here’s my confession. I like Popsicles in the summer (and hot cocoa in the winter) for treats. I’d buy a bag of Popsicles (or container of pre-mixed cocoa for winter, yes, with sugar, don’t preach to me), and I’d put a thick rubber band around my wrist. I keep a traders journal of every trade I make. At the end of every trade I’d evaluate whether I followed my trading plan without exception. If I did, I’d get a Popsicle, if I did not, I’d pull the thick rubber band way back and give the inside of my wrist a hard snap. Now this sounds odd, but after about 500 hard snaps on the wrist (I was a slow learner) and a few Popsicles something was reinforced deep in my subconscious. I found my discipline was getting better, and so did my trading plan. I started winning! If you have a discipline problem, find something that works for you and do it before you take another trade. So, let’s assume you’ll take care of the discipline problem what ever it takes because, if for no other reason, you are sick of losing and realize it’s the only way to win in this business.
So we can move to the trading plan. The goal of your trading plan is to make every decision you will need to make while trading, but in advance when you are calm and under no stress and can make your very best decisions. You’d think, gee, there are so many possibilities that’s almost impossible. Not really, you can just break it up into pieces.
We’ve looked at the 5 parts of every trade before. Remember? You remember. So let’s decide how you pick your entries. You’ve already done your in depth pair analysis and know which are most likely to trend (right?). Now you need a mechanical method of entering trades. Perhaps you have several methods, like enter off a squeeze, Tymen bubble entry, or a certain candle formation or what ever. List each one. Then make a check list of every condition that must be met for entry. Make it comprehensive. If you decide you need to modify it a little after using it a bit, do so, but not when trading.
You are never allowed to modify your trading plan while trading. If you are trading and you must make a modification, you must complete the trade, win or lose. Quit trading and take some time to clear your head and refresh, then modify your plan when you are calm and thoughtful. Tymen’s BB DNA and cbl are among the best entry methods I’ve seen, but I also have several others I use for special situations. How many ever you have, detail each so it’s so mechanical and complete that even your spouse or significant other couldn’t mess it up.
Once in a trade, it must be managed. Use my 5 lot system, or Tymen’s 2 lot system, or any trade management system(s) you prefer, but write it out, step by step, so it is very mechanical. And no fair changing from one system to another in the middle of a trade, unless that is your system, in which case it should be clearly written out so there is no question about when to change or when not to. As I said (sort of), this needs to be so clear, so complete and so mechanical that even a politician could do it without messing it up.
All that’s left now is your exit. When and how will you exit a winning trade? A losing trade? What is your emergency exit plan in case you lose your internet or your computer fails. I have an inexpensive back-up power supply so I don’t have to worry over that. What if there is some horrible news? What if a family member calls and needs help right away? Think of every reason and way that you might need to exit your trade and plan it all out in detail before the need to react.
Now you have a trading plan. It might not be perfect, but it’s better than 95% of traders that try to trade without one. You are working on that discipline problem and making good progress (my dad was a drill Sargent in the US Army, so don’t cry to me). You are not done yet couch potato! (Ha Ha, I spent the first 17 years of my life in boot camp, oh boy). You must trade it without exception, think about it, improve it, and repeat, till you’re old, like me. Once you have a winning plan, changes should be evolutionary rather than revolutionary. Your changes should be made in small and extremely well-tested increments in your most relaxed and thoughtful moments. I’ve been trading for over two decades and I review my trading plan every Saturday while the markets are closed.
And that’s all I have to say about that.
Happy Trading
i’ll just bet… i’m not alone. 
