With things like this, I feel that the only way to succeed (for me) is to build from the bottom upwards. I mean, when building a house you wouldn’t try to install windows before you’d laid the foundations. So what are the foundations of any trading plan?
In the process of learning, I’ve been looking at charts and making trades based on entirely different criteria every time. It’s literally just been a matter of “I recognise that signal (be it a divergence, a chart/candlestick pattern, MA crossovers, etc) from babypips, etc, which means that x is likely to happen”. I assume that with a trading plan, the aim is to have a far less broad approach by focusing on particular signals. Should decide what signals to focus on before doing anything else?
IMO foundations of the trading plan is you should have a proven trading system with good entry and exit strategies. Then you need a safe money management plan. These are the main things, you can include other things slowly.
Maybe you can keep track of your strategies so you you’ll know which ones you have the highest success rate with. Then you can concentrate on that and tweak your time frames, indicators, etc around that one strategy. It’s still good to have different plays though
Great question, and even better observation with regard to building. Here’s my 2 cents. Your trading plan is no different than how you are building your trading method. Build a solid foundation by: crawling before you walk, walk before you run, then run before you race.
Your trading plan should encompass, your trading method, your money management, the rules that you will follow for both and a daily trading log for you to access what you did, why you did it and what you should do the next time a situation like the current one happens again. After that you tweak if it needs to be tweaked but you make sure to give your self enough time to make an hones assessment. Don’t be one of those people who every other day is making decisions on what works and what doesn’t. Follow it with patience and discipline (the hard parts. Easy to say, can be much harder to do.) until you make changes. Keep in mind Rome wasn’t built in a day and neither will your trading plan.
To start with your plan should have a written purpose. The more detailed the better. You should have short term, medium and long term goals. Short term is the present and near future, for example you can consider anything under a year as short term. Medium may be between 1 and 5 years and long term could be over 5 years. Everything is relative to your age, experience and current situation. For example someone in their 4th year of university, who lives at home, has no debt and a savings account with 25,000 in it, would not be the same as a full time 60+ year old poker player, who was in a horrific car accident and can no longer play poker because he can no longer process information at the speed and accuracy you need to play online poker. Or if you were married with 5 kids and are working 2 jobs. Point is everyone is different that’s why only you can make your plan.
So list out what you want to accomplish in your definition of short term goals you would like to achieve. Next write down how you think you can best get there and the rules by which you will get there. For example one of my short term goals when I started was in the next 90 days to get a basic knowledge of the forex and how to trade in it. I did that by going through babypips school, searching the internet, watching utube forex video’s. During that time, I found a canned strategy that would allow me to practice in a demo account what I was learning in school etc. This served 2 purposes actually 3, while I was learning the mechanics of trading and building my own trading method, I was also developing my money management strategy and getting my first trading experiences of the virtues of patience and discipline. I kept this in a daily journal that I used to review.
Also keep in mind, how you start is not how you have to finish. If you keep your eyes and ears open and your mouth shut, you can always learn something to make your journey easier.
