In this video my partner from Macro Ops, Tyler, will provide an example of one of his trades — shorting the euro. He’ll go over his trade plan and why having one helps traders overcome their issues with emotional control and risk management.
For a trade plan to be successful, you’ll want to list the setup, your thesis, position size, risk point, and anything else that goes into your process before you place a trade. An extra benefit of this process is that writing down everything you’re going to do before you do it will help you stick to your trade plan. The extra step of writing takes out any impulse decisions that may occur. It’s an extra safeguard.
Writing is also helpful to manage emotions. Writing down how you feel will alleviate those feelings and also clue you into whether or not you should be trading in that state of mind.
Also once you have your trade plan you can use it to go back and evaluate what you did. It’s useful because they let you become your own coach. The plan is the equivalent of game footage. And what do all great players do? They watch footage of themselves. That way they can see what works and what doesn’t, and adjust accordingly. That’s the same thing you’ll be able to do once you have your trade journal in place.
It’s also very important to keep your trade plan simple. You don’t want it to be over complicated because then it becomes too difficult to use and you won’t use it.
To learn more, make sure you watch the video above!
And as always, stay Fallible out there investors!
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.