Stick to your Trading Plan

March 5, 2006 by Trader Rich

Here’s a post by Lloyd on his blog at http://tradingforaliving-assess.blogspot.com

American trader and hypnotherapist Robert Krausz argues that 75% of trading depends on your psychology and claims that hypnosis can be used to control your emotional state to maximise your trading performance.

However, he stresses on the importance of having a trading plan at the first place!

Here are the 5 basic tasks necessary to become a winning trader and my personal takes:

1. Develop an analytical methodology
– For myself, I read fundamental news and run technical analysis

2. Extract a trading plan from this methodology
– I set up short-term swing trades (1-3 days), always try to pick good entry and exit prices

3. Formulate rules for this plan including money management
– Take profits while ahead, find the best place to get out on bad trades, not relying on stop loss

4. Back-test the plan over a long period
– Start trading small positions and allow mistakes

5. Finally, stick to the plan
– Having confidence and keep practicing till perfect

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