Summary: Developing a Trading Plan

The difference between making money and losing money can be as

simple as trading with a plan or trading without one.

A trading plan is an organized approach to executing a trading

system that you’ve developed based on your market analysis and
outlook while factoring in risk management and personal
psychology.

No matter how good your trading plan

is, it won’t work if you don’t follow it.

Forex traders who follow a disciplined approach are the ones who
survive year after year after year.

They can even have more losing trades than winning ones and still
be profitable because they follow a disciplined approach.

Here is a summary of what the key benefits are:

 Trading that is simpler with a plan than it is without one.

 Reduced stress means better health.

 Ability to gauge your performance, identify problems, and make

corrections.

 A trading plan helps to prevent many psychological issues from

taking root.

 A trading plan that is adhered to strictly will reduce the number of

bad trades.

 A trading plan will help prevent irrational behavior in the heat of the

moment.

 A trading plan enables you to control the only thing you can

control… yourself!

 A trading plan will instill a large measure of discipline into your

trading. Gamblers lack both discipline and a trading plan.

 A plan will enable you to trade outside your comfort zone. How

many times have you let a loss run and cut a profit short because it

was a comfortable thing to do? A plan, executed with discipline, will

help to prevent this from happening.

 A plan is your GPS which will enable you to get from wherever you

are now to wherever you want to be: consistent profitability.

 Your trading plan is designed in such a way that if you do take a

“wrong turn,” you will know about it very quickly and have the
opportunity to correct the problem before losses spiral out of

control.

One last thing before you head off to your next class…

Always remember that the trading plan is a work in progress.

The market environment is not static. It’s dynamic and constantly

changing.  As things change, your trading plan must change, too.

Assess your trading plan and processes periodically, especially

when you have changes in your financial or life situation.
Also, as your research leads to changes in your trading system or
methods, be sure to reflect those adjustments in your forex trading
plan.
Adapt and survive.

Remember, the main purpose of the trading plan is to keep you on

task and to operate in an effective and efficient manner to make
good trading decisions.

It is, however, only as good as you make it, and it is completely

useless if it is not applied in practice.