The Key To Following A Trading Plan

So many traders who’ve yet to find their trading consistency, struggle to

trade to a plan. In fact it could well be that they don’t even have a trade plan.

But let me tell now – if you can find the key to following your trade plan and stick with it, trading consistency and trading success become far more

attainable.

Why follow a trade plan?

The problem for some traders is that they don’t really understand the

importance of a plan. There are at least three really persuasive reasons as

to why you should be doing this:

1) Trading emotions and trying to figure out the market when you are

actually trading, is much more difficult than predefining your trades and simply executing them when they

come along.

2) By following a trade plan, you are much better able to define your level

of risk.

3) You give yourself a point of reference upon which you can develop your trading. By recording and learning

about your trades, you can refine them – if they’re all figured out on the fly, this becomes a far more difficult

task.

So in fairness, a lot of traders know that following a great trade plan is

really important.

It’s just that somehow they can’t seem to get it together.

It’s not that they don’t have enough trading experience or knowledge, it’s

more that something just hasn’t “clicked” – and it’s this “click” that will

see you start to make “the trading turn”.

So what’s the key to following your trade plan?

Well, there are a few crucial parts to the machine.

It must not be an ambiguous trade plan

Let’s face it – there’s only a certain capacity for information and rules that any one person can realistically follow when markets are moving fast. But any

trade plan needs to be thorough enough to ensure that you’ve at least

covered the basics.

You should know your risk per trade for example. You should also know

what you trade; what size you trade; when you trade; when you don’t trade; what a setup is; how you

manage your trades etc.

You should know all the specific details about your trading method.

If you know what you should be doing, it’s much easier to see the things that

don’t fall into this category.

You don’t fully believe in it - The next issue is when a trader has a plan but

doesn’t fully believe in it. Things usually start well, but as the trader

becomes more emotionally embroiled, the distrust in their plan sees them

begin to violate their own rules.

There’s this gaping chasm between understanding concepts in principle

and believing them to your very core – living by them. So you need to back-test your plan (even manually, tick by tick) and you need to build trust in it

by evaluating it over a number of trades.

You are not fully focused - So much is always going on in our lives and the

challenge of remaining focused particularly for a retail trader who

trades from home, is a big one.

Even if we discount the family interrupting, the various other things that we need to do at home, the vast

amount of information constantly streaming to us through the internet

and whatever else, there is a huge amount of potential distraction from

the markets and in our charts.

By making sure that you know exactly what you are looking for, it’s far easier to remain focused from one day to the

next.

You place too much importance on single trades - You can’t hide from

emotions and the psychology of trading. Even if right now you believe that this is not an especially import aspect to your trading, believe me when I say that one day you will.

There are many issues at play here that without a doubt can impact on

your ability to follow your trade plan. But specifically, much of these have

their roots in placing too much importance on a single trade.

Not wanting to take a loss, cutting your winners short or the fear of

missing out all stem from this mindset. But the fact is, some trades will be winners and some will be losers, so

you have to let the trade fully play out.

I know that there’s always the eagerness to engage the market and that actual trading is viewed by some as the best way to learn, but truly the

best way is to theorize, observe, interact,review – take systematic

approach. Call it the “scientific method” for trading.

The only way to do this is to create and follow a plan.

You can find some great systems and

clear trade plans @ http://www.premiertraderuniversity.com