Like we said before, a trading plan is a guide line/road map to trading. There is nothing more important than knowing exactly where you are going and what you are going to do there. Having a plan helps you to know how you will get to where you are going. This makes trading easier and enjoyable.
Imagine yourself going for a trip with a GPS, you already know where to find all the important things that you may need for your journey. This makes you feel like you are you are already familiar with that place and you have nothing to worry about.
How about trading when you are well equipped, you know when to enter a trade, how to cut your losses and when to exit. You are able to constantly monitor your running trades and adjust to market changes if any. You know when you can cut your losses; lock your profits and when you can close your trade. With that kind of assurance you will be able to make trading profitable and very easy at the same time.
While trading without a trading plan, you may not be able to control your emotions and some times trade while chasing after the market. This kind of behavior may not be able to allow you hold on to your account even for a single day.
Failing to plan is planning to fail!
Since a trading plan already describes the kind of a trader you are, you will be able to focus on your trading objectives because you know the kind of time frame you should trade, how long you should hold a trade and when to take your profit.
This means after you have made a trading plan, you will know exactly what to do, when to do it and what you expect from the market. Doing this kind of routine in your trading gives you less stress to trade and you are able to schedule your time very well and feel at ease.
Having a trading plan also helps you to manage and spend your time profitably. You spend less time analyzing charts every day and and trying out different setups and chart indicators . Since you already know what to do and how to do it, all you do is to trade only that setup as the plan says. This will help you to trade only when a clear set up shows up so you will have enough family time. And family time is important!
With a trading plan, you will be able take clear records and journal for your trading system point out the common mistakes made while carrying out your trading and be able to improve them.
A trading plan also helps you to trade consistently. when you have written down your rules to trade, you will find it hard to break them. This is because somehow that’s what you believe in and you will at least try to convince yourself that it is the wright thing to do.
As you do it over and over again, you will be able to point out the very best trades taken, missed and failed trades. When you review your records you will be able to make a comparison and this will help you to identify your common mistakes which can be rectified.
In doing so, you will be able to get familiar with the market, measure your strategy’s performance and become more confident to trade.
Plan and stick to your plan, that’s the way to success. Don’t allow yourself to be tempted by yummy attractive looks, they are most times scams and costly. Stick to your plan and workout your plan. Remember this ever day, if you fail to plan you are planning to fail.
How long you should hold an open position, is a personal thing for all traders. The decision is all yours. You know what your goals are as a trader, the kind of strategy you use to trade. All this starts from what you are? and What you want? If I am to answer, this...