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