Planning your trade sounds like one of the most straightforward aspects to trading. Perhaps you sit down during the evening, scouring charts for the technical setups that you plan to enter the following day and go to sleep confident that the entry, stop and take-profit levels give you a high probability of success. This type of thorough planning is your key to success and the one thing which will provide you an edge when the market opens the following morning. This leaves the question of why so much of this planning goes out of the window as soon as you sit down in front of the live market the following day.
Failing to follow your trading plan is the single most influential element in losing money in any financial market. Similar to opening a bakery and deciding to sell shoes, losing focus on a trading plan creates confusion and, more dangerously, lets your emotions dictate the trade. Many traders prefer mechanical or even automatic trading systems for this very reason; the simple inability to follow their own trading plan and adhere strictly to the rules. Continue reading “Plan your trade, trade your plan”