This is on my To-Do list. I need create a plan for trading.
I need to define the strategy. What to look for; the conditions to determine when to enter the trade. Pick my trade sizes. Select my profit and stop loss targets. Figure out which platform to do all of this in.
And then do it.
It’s both easier and harder than it sounds.
Defining all the parameters just requires some decision making to start so that’s the easy part.
The hard part is during the execution and sticking to the plan.
When you win, the confidence builds but so does hubris. Winning repeatedly can really get you way overconfident and you start breaking your own rules. You deviate from your plan and then you lose. You lose big. Not only does it hurt, you erase all your days, weeks, months of work. It’s VERY hard to avoid.
So when you win, check if you were still within the parameters of your plan. If not, why did you deviate? Were you cocky, or was there a legitimate change in the market conditions that made you deviate? This is how you keep yourself from overconfidence
When you lose, it feels bad. It feels really bad. You begin to doubt your abilities. You want to quit. You lost not only money, but time on your loss. You lost your previous gains, and the time to get those gains. It’s like a triply whammy.
So when you lose, check if you broke away from your plan. If you did, ask yourself why? Were you overconfident? Were you blindly hopeful? Or did the market just do decide to do it’s own thing? Review your loss compared to your plan. And then review your previous wins – and remember, you’ve got a good plan and sticking to it makes sure you’re profitable.
Good luck trading, y’all!