I have been seeing many traders give up and throw away their dream of becoming a trader and it upsets me to see this because I know so many of them are so close to getting to the place where they could be consistently profitable traders. I believe that the biggest reason that traders don’t make it today is because the lack of a trading plan or not following the plan they have.
The reason a trading plan is important is because to be a successful trader I think there needs to be several skills a trader must possess. Here is a list of the skills in no particular order:
- Trading system ( which includes technical analysis and reading charts)
- Correct mindset (trader pschology)
- Risk management/trade management
- Tracking the success of your system
- Getting a system or strategy that fits their own personality
I believe that all of these pieces are critical to a traders success and if one or more of those elements is missing it will be difficult for a trader to achieve profitability on a consistent basis.
The trading plan is so important because it puts the entire package together. A trading plan helps a trader to ensure that they are not missing any one piece of the trading puzzle. I encourage you all to go back to the basics and review your plan if any element is missing then add it to your plan so you can complete the puzzle.
The other reason a trading plan is critical is because it enables traders to adjust the plan if it is not working. If you are not measuring the success of your system then you are not able to adapt and make changes if it is necessary. To track a system correctly you must follow the plan exactly or else you get bad data and when it comes time to evaluate you will not be able to make good decisions because the data is bad.
If you track your trades correctly for a designated period of time then you will be able to make adjustments to you system and test to see which method was more profitable.
I hope this helps if you have any questions do not hesitate to contact me. By leaving a comment below, you can also follow me on Twitter for more immediate updates.
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