I hope your week is off to a great start!
Today I want to talk to you about one of the single most important aspects of successful trading.
Unfortunately, it’s something that many people overlook when they first get involved with the markets.
Now, we’ve talked before about the massive amount of new retail traders that have entered the markets in 2020 alone.
But the sad truth is that the vast majority of these traders will never turn a profit.
That’s not conjecture… it’s simply a statistical fact.
See, the problem is that too often, new traders get overly excited at the prospect of hitting it big in the market…
And they dive in head first, without doing any kind of research… or due diligence… or preparation at all.
I mean, how hard can it be?
Just buy low and sell high!
Man… if it were only that easy.
Listen, the truth is that if you want to have ANY chance at trading success, you need to have this one crucial element in place.
I’m talking about a trading plan.
Now, a trading plan is simply a written set of rules that defines how and when you will place trades.
That seems straightforward enough…
But there are a few different elements that need to be considered when developing your trading plan.
For instance, your plan should include the market or markets you’ll be trading…
Whether stocks, options, forex, futures, commodities, cryptos, etc.
Your trading plan also should include rules about how much you’ll risk on any one trade…
How you’ll determine your target profit and stop-loss levels…
And any indicators you’ll use on your charts to guide your trading.
Now, it’s very important that your trading plan is written down.
During market hours, you must follow your plan meticulously.
If you don’t have the plan written down somewhere that you can clearly see while you’re trading, it will be too easy for you to make emotional decisions in the heat of the moment…
Remember, your trading plan can only work if you actually stick to it!
Now, that doesn’t mean that your trading plan can never change.
In fact, you should keep a trade journal so that you can record what happened during each trading session…
And from there, you can make adjustments and tweaks to your plan when the markets are closed.
But, when the markets are open and you’re actively trading, you have to stick to the plan.
Now, one of the most critical elements of your trading plan is your trading strategy.
There are several different strategies that are suited for different instruments…
And different goals.
And in future issues, we’ll start breaking down some of the major trading strategies out there.
Yet incredibly simple and straightforward that I’ve ever seen.
Not only that…
But it’s incredibly profitable, too.