A solid trading plan will list particulars such as: The type of Market Cap’s you’ll trade, whether you’re a Day/Swing trader, indicators you’ll use, time of day you’ll trade, patterns you’ll trade etc. The goal of a trading plan is to keep you focused. It's to create a lane for you to stay in. It's a system that’s developed to cater to your personal attributes and your view/understanding of the market(s). It's amazing and startling as to how many people don't actually have or use a trading plan. To me, it's just irresponsible to enter a trade that doesn't follow some form of a system that's been tested for success. Trading is very much a science and an art. The science portion is the trading plan. Its understanding that there are systematic guidelines that MUST be followed BEFORE participating in a trade. Those “systematic guidelines” are the rules and criteria that you subscribe to and follow without deviation.
If you don't have a trading plan and you simply put on positions you will fall victim to the noise. You will, at some point, forfeit profits and principal capital to those that have a trading plan who know what they are doing. Trading is, at its core, supposed to be boring. It's a simple business in which you know what to do and when. You manage your downside first and look to make profits second. All this is achieved through a successful, well tested, Trading plan. If you are part of the crowd that has not developed or is not using a trading plan I urge you to take a moment to think about what you’re actually doing. Think about the dangers that the markets and it participants present daily. Think about what could possibly happen if you don't tighten up your profile and start using a trading plan. There is a bit of a harsh and dark undertone to this article. That is by design.
My hope is that you employ a trading plan moving forward that makes sense (by the way of back testing) that will help you cut out market noise and assist in mitigating unnecessary risk. My responsibility as a market participant and trading mentor is to continuously work with the trading community and work towards a situation in which new traders are given the tools to survive the markets.