Hello Trader,

The Trading Plan

Part 2

Before I forget, let me remind you that creating your own trading plan is not a monumental task.

It can be quite easy!

Here is a method I use for creating business plans if I ever happened to get bogged down. I make it fun and I make it simple all at the same time.

Are you ready for the secret?

Well here goes.

All I do is imagine that I have a friend who is asking me to invest $10,000 for me. I then jot down all the questions that I would like to ask my friend to find out if what is about to do with my $10,000 makes sense. Then I simply ask myself those very same questions and then write down my own personal answers to those questions.

For example, the first question can be as simple as, how will you make my $10,000 grow? Following questions might be: What will you invest in? What is the yearly return on investment estimated to be? You get the picture. Simply ask more questions to get more answers. The more answers you have the more detailed your trading plan will be.

There you have it. A quick and easy start to your trading plan. I told you it would be easy.

This simple plan is by no means comprehensive, but it is a start. I would venture to say that over 90% of traders never, ever get this far. This could very well be a contributing factor to why a large percentage never make a profit in the markets.

I would suggest that if you can’t write a single sentence describing how you hope to achieve your goal then you won’t achieve your goal.

So go ahead, ask yourself and answer a few questions to create a simple trading plan. This is your first exercise. Now one thing I don’t want you to do is to initially make this a laborious task. In fact, I’m only going to require initially that you take 15 minutes and for that 15 minutes write out the questions and answers for your basic trading plan. Remember 15 minutes is your time limit. You can set an alarm to go off in 15 minutes, use a stopwatch or something like that… But don’t write any longer than 15 minutes. At the end of 15 minutes stop even if you have more ideas, stop.

You should now have the basic idea of the who, what, when, where , and how of your trading. You can refer to what you have written time and time again and also add to it as you progress. I would suggest to keep this in a spiral bound notebook for future reference.

Remember to keep your trading notebook handy as we have a lot more add to it.

Good Trading and Good Life!

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