| Having a trading plan is similar to having a map when | | | | then plot the pivot points and any significant price level |
| traveling to a new location. Modern day vehicles often | | | | that I will be looking at accordingly. This gives me a |
| come with a navigation system making it easier to | | | | road map for the markets. |
| travel with the fastest route. A trading plan acts as a | | | | The second step is to plot the route I plan to take on |
| road map for the trading day. | | | | the road map. I will visualize a number of possible |
| Most new traders trade without a plan. This often | | | | situations for the following trading day. Couple |
| causes reckless trading, emotional trading, and no | | | | examples include: |
| predefined entry and exit points. They are simply lost | | | | 1. If the markets open up above the value high pivot, I |
| during the trading session. Designing a plan prior to the | | | | will look for long setups. |
| open is necessary. Most new traders are still | | | | 2. If the markets gap down to the daily pivot, I will fade |
| inexperienced to devise an effective trading plan that | | | | it for a gap fill. |
| can guide them throughout the day. They are unable | | | | 3. I will not trade between certain price levels as it |
| to locate key support and resistance levels, do not hold | | | | offers no opportunity. |
| strict money management rules, and lack the discipline | | | | Every trader has their own methods and analysis |
| needed in trading. In order to devise a plan, one must | | | | techniques to develop a trading plan. There is no right |
| be able to understand how to make one. This requires | | | | or wrong way to devise one. The biggest mistake alot |
| market knowledge and a methodology a trader feels | | | | of traders make is that even with a plan, they are |
| comfortable with. | | | | unable to follow it. Why draw a map and not use it? |
| So What Is A Trading Plan? | | | | Develop a trading plan and stick with it. Have the |
| Everyday after the close I will spend 1-2 hours studying | | | | discipline to follow your plans. By having a plan and |
| the market action. I will then go through my daily charts, | | | | applying money management, you have a significant |
| 233 TICK charts, and Market Profile charts. First thing I | | | | edge over a good percentage of traders. Best of |
| do is to look for market acceptance vs rejection. Then | | | | trading. |
| I switch to the daily chart to view the bigger trend. I will | | | | |