A trading plan can include anything that you find useful to meet your trading goals. However there are some must haves to be included in your trading plan, such as: The type of strategy you are going to use. Money management rules The assets you want to trade. Capital available for trading Your risk tolerance
More than being a part of a trading plan, trade identification and entry or exit points are a part of a trading strategy. A trading plan and strategy may look similar but there's a huge difference between them. A planning made upfront before taking any position helps to take calculated measures.
How do you quantify your risk tolerance. Most people don't know what their risk tolerance is much less how to put a number on it. How do you define how risky something is?
The four important things that should be a part of trading plan are: The currencies you want to trade Your trading strategy Entry and exit points Risk management rules For any trading plan to give good results, one must have a strict discipline to follow their plan even when things are unexpected.
A tip of the hat to ValeryN for this nugget: What makes new investors buy and sell at the wrong times? This has little to do with psychology and is entirely due to having no plan. When plan is backed up by solid stats you don't overthink it, just keep executing without worrying too much if any trade is a win or a loss. Doing wrong things at the wrong time is simply a byproduct of not having sufficient research, plan and/or confidence in them.
Edge...because without it there's nothing to manage risk. if I don't have a positive expectancy, then I don't play the game.
How Do You Start Trading Without A Methodology? https://www.smbtraining.com/blog/how-do-you-start-trading-without-a-methodology https://synapsetrading.com/money-method-mindset/
Gotta devise strategies that work for the current market condition or wait it out. We are in a very weak and peculiar market rn.
Tip of the hat to bone, ET Sponsor for his post from which this was lifted, "...and also a rules set designed for taking a trade entry and for setting both the profit target and the stop-loss level" https://www.elitetrader.com/et/threads/spreadprofessor-futures-spreads.317119/page-42#post-5596629 >