Failing to Plan? You’re Planning to Fail in Trading Too

In trading, failing to plan can cost you more than just money. Let’s dive into what a trading plan is, why it’s important, and how to make one!

✅ What is a Trading Plan?

A trading plan is a set of rules and strategies that a trader abides by to:

• Minimize losses
• Manage risks
• Achieve consistent results

✅ Why is it Important?

1. Consistency

• A trading plan removes emotions from decision-making, which are one of the biggest enemies while trading.

2. Risk Management

• A trading plan protects your capital and ensures you don’t lose more than you can afford.

3. Focus

• It outlines your investment objectives, helping you stay focused on your goals without getting distracted.

4. Discipline

• Discipline shields you from revenge trading, keeping your strategy strong and steady.

✅ How is a Trading Plan Made?

Step 1: Decide Your Goal

• Example: “I want to make ₹500 this month.”

Step 2: Commit Your Time to Trading

• Example: “I’ll trade 1 hour every day.”

Step 3: Choose Your Risk-Reward Ratio

• Example: “I’m not going to overtrade or wait for my losses to recover.”

Step 4: Determine How Much Capital to Trade

• Example: “I will trade 2-3% of my capital on each trade.”

Step 5: Keep a Trading Journal

• Example: “I bought Infosys at ₹1500, sold it at ₹1650,” and document it in a diary.

Step 6: Backtest Your Strategy

• Use fake money to test your strategy before using real money.

Planning your trades means trading your plan, and that’s the key to long-term success!